PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

JEWISH COLONIZATION ASSOCIATION BILL [Lords].

Read the Third time, and passed, without Amendment.

LONDON AND NORTH EASTERN RAILWAY BILL

Read the Third time, and passed.

Oral Answers to Questions — TRADE AND COMMERCE

Razor Blades (Preservation)

Major Sir Jocelyn Lucas: asked the President of the Board of Trade if, in view of the numerous complaints of the shortage of razor blades and the inferiority of the steel used, he will publicise the fact that daily honing in a tumbler of hot water before and after use will make the blades last from six to 10 times as long.

The President of the Board of Trade (Mr. Dalton): I am very grateful to my hon. and gallant Friend for giving publicity to this interesting method of lengthening the life of razor blades, and I hope that many people will try it.

Sir J. Lucas: While thanking the Minister for his satisfactory reply, may I ask him if he is aware that I had a letter last week from an admiral who has used one blade for 11 months and a telegram from a technician who has used two blades in three years, the first having been accidentally broken?

Major Vyvyan Adams: May I ask whether this admiral might be bearded, and whether it is the case that this alleged miracle is scientifically established?

Mr. Magnay: Would the Minister make it possible to get hot water?

Sir John Jarvis: Will the right hon. Gentleman disseminate this information to the troops, as there is no doubt that it is correct?

Utility Furniture

Mr. Shephard: asked the President of the Board of Trade if he is aware that the 30 utility furniture coupons issued to newly married couples are not sufficient adequately to furnish one room; and will he consider restoring the number to 60.

Mr. Colman: asked the President of the Board of Trade whether, in view of the experience by bombed-out people in furnishing their new homes, he will consider increasing the number of coupons allotted to them for utility furniture so that they can buy bare necessities.

Mr. Dalton: I have recently, as the House knows, extended the priority classes entitled to utility furniture, and I shall increase the allowance as soon as circumstances permit. I am glad to say that the production of utility furniture is rising, but the labour and material which can at present be spared for this purpose are strictly limited.

Mr. Shephard: While appreciating my right hon. Friend's reply, may I ask him whether he will sympathetically bear in mind those cases where the husband is serving in the Forces and the wife is endeavouring to establish a home for him on his return?

Mr. Dalton: Yes, Sir, certainly. I am most anxious to do the best I can for the various sections entitled to these coupons, but the choice is between giving a larger quantity to a smaller number of people or maintaining the present allocation, in which a larger number can participate. In the present state of supply conditions, it is better it should remain as it is.

Mr. Colman: Will my right hon. Friend be good enough to bear in mind the position of those who have been bombed out and see whether it is not possible to give some increase?

Mr. Dalton: There is a special allowance for people who have been bombed out. Over and above the basic allowance of 30 coupons, seven units are allowed to each additional person, irrespective of age, who has been bombed out.

Patent Law (Appointment Committee)

Mr. Alfred Edwards: asked the President of the Board of Trade whether he is now in a position to make a statement with regard to Patent Law Reform.

Mr. Dalton: Yes, Sir. After consulting my noble Friend the Lord Chancellor I have appointed a Committee with the following terms of reference:
To consider and report whether any, and it so what, changes are desirable in the Patents and Designs Acts, and in the practice of the Patent Office and the Courts in relation to matters arising therefrom.
In particular, the Committee is requested to give early consideration to, and to submit an interim report or reports on—

(a) the initiation, conduct and determination of legal proceedings arising under or out of the Patents and Designs Acts including the constitution of the appropriate Tribunals; and
(b) the provisions of these Acts for the prevention of the abuse of monopoly rights; and to suggest any amendments of the statutory provisions or of procedure thereunder which, in their opinion, would facilitate the expeditious settlement and the reduction of the cost of legal proceedings in Patent cases and would encourage the use of inventions and the progress of industry and trade."
I am glad to say that Mr. Kenneth Swan, K.C., has consented to act as Chairman. The other members of the Committee are:

Mr. Hubert Gill,
Mr. James Mould,
Captain B. H. Peter,
Dr. David Pye,
Mrs. Joan Robinson,
Mr. II. L. Saunders,
Dr. A. J. V. Underwood.

Mr. Edwards: Is it right to say that the necessity for this inquiry arises out of the misuse of the present patent law, whereby people take out patents to prevent development and progress, rather than to utilise them for those who want progress?

Mr. Dalton: That view is very widely held, and because it is widely held and because, if it is true, it is a serious matter, I have decided to appoint this Committee.

Russia

Commander Sir Archibald Southby: asked the President of the Board of Trade if he is aware that Russia is placing large orders in the United States for post-war delivery of various goods; whether any orders have been placed in this country; and if so, to what extent.

Mr. Dalton: Supplies to Russia, both from this country and the United States,

are at present limited to goods required during the war period. I understand that no orders with firm delivery dates for post-war supplies are yet being placed by the Russians either in this country or the United States, though business men in both countries are naturally discussing future possibilities.

Sir A. Southby: Does my right hon. Friend not consider that the future prosperity of the people of these islands would be better served if we paid more attention to rebuilding our own export trade and less to consideration of such expensive commitments as the Beveridge Report?

Mr. Dalton: I am all in favour of the export trade, as I have frequently stated, but I must not be taken to be against social security—quite the contrary.

Sir Patrick Hannon: Does my right hon. Friend contemplate the appointment of an Anglo-Russian Committee to take advantage of any opportunities in this direction that might arise?

Mr. Dalton: I doubt whether we need a special committee, but I should be glad to get in touch with business people, indeed, I am in touch with a number of business people interested in Russia, and we are giving them every possible encouragement to foster trade.

Mr. McKinlay: Is my right hon. Friend aware that those who are now pressing this matter are the people who terminated the former Russian trade agreement?

Industries (Post-War Re-establishment)

Sir Henry Morris-Jones: asked the President of the Board of Trade whether he can give any indication to owners of industrial buildings and plant in North Wales which have been requisitioned by the Government as to their position after the defeat of Germany, particularly where work of a civilian nature only is being undertaken therein, as it is important for their future plans to know when these buildings will be 'released.

Mr. Wootton-Davies: asked the President of the Board of Trade whether in view of the fact that firms concentrated out of activity as a result of economy in respect of labour and factory space, are to have a right to re-establishment after the war, the same right will be accorded to


those commercial or trading organisations whose existence has been terminated by official requisitioning of their premises.

Mr. Dalton: Much must depend upon the progress of the war, not only in Europe but also in the Far East, and it is not possible at present to foresee the conditions under which the requisitioned premises referred to by my hon. Friends will be released for peace-time purposes.

Sir H. Morris-Jones: Does my right hon. Friend appreciate that the companies which have taken over these premises, with Government sanction, have their own factories and equipment intact in London, and does he realise the hardship likely to occur to these North Wales business concerns through uncertainty as to when their premises will be available to them?

Mr. Dalton: I am sure my hon. Friend realises that it is very difficult to make a hard-and-fast statement at this stage of the war. What we aim at doing, is to get production started up again as quickly as we can, having regard to all the circumstances.

Second-hand Furniture (Price Control)

Major Lyons: asked the President of the Board of Trade (1) if he has now reached any decision on the question of price control of furniture sold by auction;
(2) what alteration he proposes to make in the price control of second-hand furniture.

Mr. Dalton: I am glad to say that progress is being made with this exceedingly tricky problem, and I hope shortly to be able to announce an effective scheme for controlling these prices.

Major Lyons: Is the Department aware of the great exploitation which is taking place against the public in relation to auction sales; and will my right hon. Friend regard this as a matter of some importance?

Mr. Dalton: I am very well aware that all sorts of racketeering are going on in this business. We have been making our best efforts to find a scheme that shall be watertight and enforceable. It is easy to make an Order, but more difficult to make one which can be enforced. We are, however, giving high priority to the matter.

STATUTORY RULES AND ORDERS

Sir Reginald Clarry: asked the President of the Board of Trade why the concession in relation to prices in the Goods and Services (Price Control) Wool Yarn and Wool Cloth Order (S.R. & O., No. 316, of 1944), is limited to firms in Cumberland, Durham, Northumberland, Westmorland and Scotland.

Mr. Dalton: The Central Price Regulation Committee advised me that, in view of certain cost increases peculiar to the areas to which my hon. Friend refers, a revision of the maximum prices hitherto permitted for these areas was justified.

Mr. Keeling: asked the President of the Board of Trade why the Customs Export of Goods (Control) Order (S.R. & O., No. 320, of 1944), which relates to two Acts of Parliament and modifies another Statutory Rule and Order, contains no explanatory memorandum despite the fact that, while it appears to affect the export of over 40 separate commodities, it cannot be understood unless it is explained.

Mr. Dalton: This Order makes a number of minor additions to, and deletions from, the Export Control List. A full explanation was issued to the general and trade Press and circulated to trade bodies concerned. This explanation was also published in the Board of Trade Journal for 1st April. I am sending my hon. Friend a copy of this explanation and am placing another copy in the Library.

Mr. Keeling: Do not Members of Parliament who have to consider this Order deserve some consideration; and would not my right hon. Friend consider putting his house in order before the forthcoming Debate on delegated legislation?

Mr. Keeling: asked the Secretary of State for War whether, in the absence of any memorandum explaining the Emergency Powers (Defence) Protected Areas Order (S.R. & O., No. 380/S.16, of 1944), he can state the effect of the Order.

Sir J. Grigg: This Order cancelled the Orders which established the protected areas referred to. It was possible to do this in view of the application of more stringent by-laws to visitors in those areas.

Mr. Keeling: Would my right hon. Friend draw the attention of his Depart-


ment to the recommendation of the Donoughmore Committee that delegated legislation should explain itself?

Sir Reginald Clarry: asked the Financial Secretary to the Treasury why, in the corrigendum slip to the Emergency Powers (Defence) Benzole and Coal Spirit Order (S.R. & O., No. 172, of 1944), the word coal, when it appears second in the definition coal spirit, means crude coal spirit and refined coal spirit is printed in italic type; and what is the meaning of the corrigendum slip.

The Financial Secretary to the Treasury (Mr. Assheton): The corrigendum slip was issued to correct a printer's error which I regret, and the use of italics was to draw attention to the one word incorrectly produced in the order as printed.

TURKISH CHROME ORE (EXPORTS)

Mr. G. Strauss: asked the Parliamentary Secretary to the Ministry of Economic Warfare the amount of chrome ore being exported from Turkey now, together with comparable figures since 1938.

The Parliamentary Secretary to the Ministry of Economic Warfare (Mr. Dingle Foot): Since this Question was put down, hon. Members will have seen the welcome news that the Turkish Government has prohibited the export of chrome ore to the Axis. Owing to difficulties of transport it is not possible to say what quantity is at this moment being exported to the United Nations. As regards the figures of past years, I will, with my hon. Friend's permission, circulate them in the OFFICIAL REPORT.

Mr. Strauss: May we take it that these exports will cease from now, or from some future date?

Mr. Foot: They ceased as from the morning of 21st April.

Mr. Strauss: While congratulating the Government upon their success in this matter, may I ask the hon. Gentleman whether he will bring to the attention of our oldest Ally this example of the help which can be given by a neutral nation?

Mr. Foot: I hope that the Turkish example will not be lost upon them.

Miss Ward: Can my hon. Friend give the figures of the contracts between

Turkey and Germany during the last two years?

Mr. Foot: That is another question. Perhaps my hon. Friend will put it down.

Following are the figures:


Total exports to all countries (in metric tons).


1938
208,055


1939
192,843


1940
110,037


1941
81,286


1942
129,307


1943 (estimated)
103,000


1944(January and February only)
16,670

Oral Answers to Questions — BRITISH ARMY

Boer War Pensions

Sir Geoffrey Shakespeare: asked the Secretary of State for War what is the result of his review of the rates and conditions of pensions of Boer War pensioners administered by the Royal Hospital, Chelsea.

The Secretary of State for War (Sir James Grigg): These Boer War disability pensions which are administered by the Royal Hospital, Chelsea, will in future be assessed on the same basis as the bulk of the Boer War disability pension cases, which are administered by my right hon. Friend the Minister of Pensions. This, in effect, means that Great War disability pension rates will be given where they are more advantageous than the existing award. I am arranging for the cases to be reviewed on this basis.

Sir G. Shakespeare: May I take this opportunity of thanking my right hon. Friend for the prompt way in which he has dealt with these hard cases?

Middle East Forces (Political Discussions)

Mr. Pritt: asked the Secretary of State for War whether he is aware that at the meeting of the "Forces Parliament," M.E.F., held on 5th April, an official decision on which the committee of the parliament had not even been consulted, was read out, ordering that the name of parliament must not be used; that there must be no publicity of any kind, even war correspondents being excluded and that the proceedings must be supervised and directed by an Army education officer; that the troops present protested with a vote of approximately


600 to one; whether he will immediately reverse this treatment and, in particular, will direct that the threats to post the leaders of the protest be not carried out.

Mr. Mathers: asked the Secretary of State for War, on whose instructions the Forces in Cairo have been deprived of the opportunity of running discussions in the form of a mock parliament; for what reason this educational activity was stopped; and will he give instructions that the ban on this feature shall be lifted.

Mr. Edgar Granville: asked the Secretary of State for War on what grounds the Army amateur parliament or discussion group in Cairo has been banned; if any of those who protested have been threatened with posting; and if he will reinstate it to its former status and so give members of the fighting Forces freedom of expression on subjects of interest in a war to save democracy.

Sir J. Grigg: I am expecting a report on this. If the Commander-in-Chief has intervened, as suggested, it was no doubt in the interests of discipline and of maintaining the non-political character of the Army.

Mr. Pritt: Would the right hon. Gentleman bear in mind that if he is waiting for a report, he could not do the House and the country a much worse service than to assume, in advance, that the people reporting will report in their own favour, and to tell them so?

Mr. Shinwell: Does the right hon. Gentleman suggest that the general officer in command exercised his authority on the ground of discipline? How does he know? Has he had any communication to that effect, or is he expressing his own opinion?

Sir J. Grigg: I am expressing my own opinion, from my knowledge of the general officer commanding.

Mr. Shinwell: If that is so, will the right hon. Gentleman afford this House an opportunity of debating whether his opinion is right or wrong?

Sir J. Grigg: I think the House had better wait until I have had a report on the matter.

Mr. Loverseed: Is the right hon. Gentleman aware that I have this morning received a report from Cairo, which states

that the action was taken in view of the unfortunate German propaganda concerning the parliament? Will he state whether, in fact, the excuse which was given holds water, and whether it would not be as well to close down this Parliament also?

Mr. Mathers: Is the right hon. Gentleman's expression of opinion intended by him to give a clue to the kind of report that will be welcome?

Sir J. Grigg: On the contrary. The report was asked for before this Question was put down.

Mr. Gallacher: Is it not the case that the Secretary of State for War and the High Command are concerned not so much that the troops are discussing politics, as that they are discussing the wrong kind of politics?

Mr. Granville: While the right hon. Gentleman is awaiting the report, will the full activities of this amateur parliament be allowed to continue under the new Regulations?

Sir J. Grigg: That is a matter, in the first instance, for the Commander-in-Chief. I prefer to say nothing further until I get his report—

Mr. Shinwell: But the right hon. Gentleman has said something.

Sir J. Grigg: —except that I have the utmost confidence in the Commander-in-Chief.

Mr. Pritt: Would the right hon. Gentleman, since he is waiting for a report, stop the public relations officer of his Department from putting round all sorts of friendly descriptions of this matter in the prass?

Sir J. Grigg: I do not know to what reports the hon. and learned Member refers. Perhaps he would bring to my notice the suggested or planted articles to which he refers.

Mr. Pritt: Might I suggest that the right hon. Gentleman should communicate with a Press cuttings agency?

Intestacy (Next of Kin).

Mrs. Tate: asked the Secretary of State for War whether he is aware that under the Administration of Estates Act, 1925, on the death of an intestate bachelor his father and mother are equally


entitled to the grant of administration and a share of the estate; and why his Department under the Regimental Debts Act, gives the father precedence of the mother as the person entitled to the estate.

Sir J. Grigg: Yes, Sir, and due effect is in practice given to these principles in distributing any sums due to an officer or soldier who dies intestate. Medals and decorations cannot be distributed in this way and if the man has not made a will they are sent to the next-of-kin in the order of relationship laid down under the Regimental Debts Act.

Lost Kit (Compensation)

Mr. Shephard: asked the Secretary of State for War if he is aware that compensation for loss of officer's kit due to enemy action is subject to depreciation amounting in some cases to 50 per cent.; and will he take steps to see that an officer is not financially penalised by reason of enemy action.

Sir J. Grigg: An officer is responsible for the maintenance of his kit from his emoluments. If kit is lost, in circumstances in which compensation is admissible, the compensation is based on the reasonable cost of replacement of the articles specified in a published list, less an abatement for wear and tear. This abatement takes into account the estimated useful life of the article lost but in no case exceeds 50 per cent. of its value new. If depreciation were ignored, the officer who lost his kit would be at an advantage over the officer who had to replace his kit when it was worn out.

Mr. Shephard: Is my right hon. Friend aware that this rigour of treatment is greatly resented by serving officers, and will he not re-examine the whole question?

Sir J. Grigg: My experience has been that when serving officers complain, and the trouble is taken to explain the Regulations to them, they go away satisfied.

Mr. Granville: asked the Secretary of State for War how many of the troops who took part in the battle of El Alamein and who left their kit at the base in Cairo have now discovered articles of personal equipment to be missing from their baggage; and whether replacements or compensation in full is provided by the Army authorities.

Sir J. Grigg: I regret that I have no particulars which would enable me to answer the first part of the Question. Replacement is made, in cash or kind, of all articles of personal equipment necessary for the performance of military duties. Other personal property is, generally speaking, carried by the owner at his own risk.

Mr. Granville: Is the right hon. Gentleman aware that in one regiment, which left its kit bags in Cairo, practically every officer's kit was tampered with; that many of the men received nothing but empty kit bags, and that they have been told that they will receive no compensation?

Sir J. Grigg: If these were articles of equipment and not bulky personal belongings, which were not necessary for active service, it seems to me that the individuals concerned have been wrongly informed. Perhaps the hon. Member will let me have particulars of the regiment and I will investigate the matter.

R.A.M.C. Officers (Overseas Service)

Mr. John Dugdale: asked the Secretary of State for War why an order has been issued to R.A.M.C. officers in India stating that, while other ranks will be brought home at the end of five years' service overseas, officers may have to remain abroad for a further year; and on whose authority it was issued.

Sir J. Grigg: Inquiries have already been made about this, but a reply has not yet been received.

Tanks

Mr. Hammersley: asked the Secretary of State for War, why he has refused the honourable Member for East Willesden permission to see the captured German Tiger tank.

Sir J. Grigg: As I have explained to the hon. Member, my decision in this case followed the reply given by the Prime Minister on Tuesday last to a similar, but more general, request from the hon. Member for Ipswich (Mr. Stokes).

Mr. Hammersley: Does not my right hon. Friend realise that this request is a very simple one, for information which ought to be made available, if required, to every Member of this House?

Sir J. Grigg: The request was that facilities should be furnished to the hon. Member specially. The Prime Minister's reply amounted to a postponement of meeting that request for Members generally, and it seems to me to follow that what the Prime Minister has declined to grant, at any rate for the time being, to Members generally, cannot be admitted to one particular Member.

Mr. Graham White: Are there not very strong reasons, on practical grounds, for permitting any Member who may have technical knowledge of problems pertaining to tanks, an opportunity of seeing this vehicle?

Sir J. Grigg: That point seems to be covered by the Prime Minister's answer.

Mr. Thorne: Why not have this tank brought into New Palace Yard, so that we can all see it?

Mr. Keeling: Is not my right hon. Friend aware that hon. Members of this House have had several opportunities, both before and during the war, of inspecting British tanks, even those on the secret list, and does he not think that the refusal of this request is a little petty?

Sir J. Grigg: I am simply following the course laid down on Tuesday last by the Prime Minister.

Mr. Hammersley: Is it not a fact that there is no request of any character for any special facilities, and that the request which I made was put in a long time before the Prime Minister's answer? Is this not, in fact, a case of the Secretary of State for War shielding himself behind the Prime Minister?

Sir J. Grigg: It is not that I am shielding myself behind the Prime Minister, but that the Prime Minister's decisions are binding upon me.

Mr. Hammersley: Owing to the unsatisfactory nature of the reply, I beg to give notice that I propose to raise this matter on the Adjournment.

Mr. Hammersley: asked the Secretary of State for War (1) whether it is intended to use the Cavalier tank for fighting against the enemy;
(2) whether it is intended to use the Centaur tank for fighting against the enemy in the role for which it was designed.

Sir J. Grigg: It is undesirable, particularly at this time, to give the enemy any information about the weapons which may be used in action against him.

Mr. Stokes: Has not the Minister already declared that the Centaur is out of production and out of date?

Sir J. Grigg: Only in a secret Debate.

Mr. Hammersley: Is it not a fact that it has already been publicly stated that both the Cavalier and the Centaur are not to be used in their original roles to fight against the enemy?

Sir Robert Tasker: On a point of Order. Is it in Order for any hon. Member to make reference to statements made in a Secret Session?

Mr. A. Bevan: Is it not a fact that the House has been misled for years about the situation concerning these tanks, and that the right hon. Gentleman is using this formula about not giving information to the enemy to conceal his own misdeeds?

Major Adams: How could it be wise, on security grounds, to give a denial or confirmation of the allegations underlying these Questions?

General Sir George Jeffreys: asked the Secretary of State for War whether production of the Covenanter tank has been discontinued; whether this tank is still intended to be used in action against the enemy, or for what purpose will these tanks be used.

Sir J. Grigg: The answer to the first part of the Question is "Yes, Sir." As to the second part it is undesirable to disclose to the enemy any information about the types of weapons to be used in action against him.

War Office, Civilian Staffs (Official Secrets Act)

Mr. W. J. Brown: asked the Secretary of State for War why an official allegation has been made that the Official Secrets Act has been contravened in consequence of the receipt by the Civil Service Clerical Association of information as to the staggering of hours of certain civilian staffs in his Department; what action is to be taken against the official responsible for this information, as such information is constantly passed to recognised staff associations by their Departmental representatives and is devoid of


security information which could be of use to the enemy and such action makes it difficult for recognised staff associations effectively to discharge their trade union functions.

Sir J. Grigg: I think the hon. Member has misunderstood the position. There is no intention whatever of interfering with the right of staff associations to discharge their trade union functions. The question is simply whether a Government employee is entitled, without authority, to send his association a copy of, or to communicate the contents of, documents and letters to which he has had access in the course of his official duties. To this question, whatever the documents involved, the answer must be "No." The ultimate sanction for the current War Office instructions on this matter is, of course, the Official Secrets Acts, but in the type of case which this appears to be there is not, and never has been, any intention of asking for a prosecution under those Acts. The case will be investigated and dealt with as an ordinary matter of office discipline.

Mr. Brown: Is not the Minister aware that it is common practice in Government Departments to deal with matters affecting staff conditions and conditions of work, in documents which are, technically and officially, secret, and that if the individual is not at liberty to communicate the substance of them to his union, and his union is not free to act on that information when they get it, it constitutes an effective estoppel on action? If he wants to take effective action—

Mr. Speaker: Mr. Hammersley.

Mr. Brown: On a point of Order. May I have a reply?

Mr. Speaker: The hon. Gentleman has made more of a long and connected argument than a supplementary question. He cannot expect a reply to that. It would be too long. If he had put his question more shortly he would have got a reply.

Franchise (Service Register)

Mr. Loverseed: asked the Secretary of State for War whether he is yet in a position to state what action has been taken to ensure that all soldiers over the age of 21 will be placed on the Electoral Register: and what steps will be taken to keep this Register up to date.

Sir J. Grigg: In order to be placed on the Service Register officers and other ranks must complete an Armed Forces Declaration Card. Full instructions about this were issued on 1st April, including a notice which is posted on every unit notice board. These instructions include provisions for keeping the register up to date.

Mr. Loverseed: Is the right hon. Gentleman satisfied that it is sufficient to place on notice boards extracts from A.C.I. 483, which puts the onus of registration on the men, rather than on the Services?

Sir J. Grigg: The notice on the notice board shows rather more than that. It says in block capitals, "If you do not complete Army Form B.2626 you will not be able to vote." That seems to me to go a pretty long way.

Mr. Woodburn: Can the right hon. Gentleman assure us that the fact of the notice being on the notice board fulfils the promise which was given, that it would be brought to the notice of every soldier that he would be entitled to vote in this way?

Sir J. Grigg: I do not see what could be a better fulfilment of the promise. The practice of inducing soldiers to go and look at the notice board for instructions, which concern them, has been developed very much.

Mr. Shinwell: Should not every person in the Forces who has reached the age of 21 be automatically placed on the register? Why should there be any discrimination between the men serving in the Forces and the civilian population?

Sir J. Grigg: That is a different matter. Mr. Shinwell: Is it a different matter?

Mr. Bellenger: I take it that the right hon. Gentleman has looked at this A.C.I.? Is he aware that there is considerable machinery to be gone through by the soldier before he can get his vote? Will he make it an order that commanding officers shall see that their men are registered, and that it is not merely left to the men to look at notice boards, which in many cases are non-existent in field forces?

Mr. W. J. Brown: Is the right hon. Gentleman aware that there are many Army establishments where this notice


has not been put up at all? Does he regard that as effectively carrying out the promise?

Sir J. Grigg: Perhaps the hon. Member would give me notice of this long list of Army establishments where the notice has not been put up.

Sir Hugh O'Neill: What steps have been taken to acquaint soldiers serving abroad with the position as to appointing proxies?

Sir J. Grigg: Perhaps the right hon. Gentleman would put that question down. I would like to have notice of it.

Mr. Pritt: Would the right hon. Gentleman not consider appointing one officer for each large unit, possibly a brigade, whose duty it would be to see that these men who are fighting for this country should also take part in governing it?

Sir J. Grigg: I will certainly consider that.

Mr. Loverseed: Has not the Army a simple means of registering every man? Would the right hon. Gentleman not agree that when each man went for his pay he could fill in the form at that time? That would ensure that every one was registered.

Hon. Members: Answer.

Mr. Loverseed: Can I have a reply? I beg to give notice that I shall raise the matter on the Adjournment.

"V" Cigarettes, Middle East

Miss Ward: asked the Secretary of State for War on what date his attention was first drawn from the Middle East theatre of war to complaints against "V" cigarettes; and at what date it was decided no more should be issued.

Sir J. Grigg: Representations were first made about these cigarettes in November last and arrangements were immediately made to supply British cigarettes instead. These arrangements took effect in Italy in February and in the Middle East the issue of "V" cigarettes should stop in a month or so.

Miss Ward: Can my right hon. Friend tell me what was the expense of the withdrawal of these cigarettes?

Sir J. Grigg: Not without notice, I am afraid.

Dependants' Allowances

Miss Ward: asked the Secretary of State for War whether, in view of the practice of the War Service Grants Committee to disregard a proportion of a wife's earnings in the assessment of a grant, he will follow the same practice in assessing dependants' allowances.

Sir J. Grigg: I think my hon. Friend will find that the War Office practice for dependants' allowance is in line with the practice of the War Service Grants Committee in dealing with dependants.

Legal Aid Section, London District

Mr. Bellenger: asked the Secretary of State for War whether he is aware of the increasing accumulation of work in the London District Legal Aid Bureau owing to shortage of staff; and, as this is affecting a large number of cases involving domestic affairs of serving soldiers, what steps he is taking to augment the present staff.

Sir J. Grigg: Yes, Sir. Arrangements are now in hand to increase the staff of this Legal Aid Section.

London Passenger Transport (Assistance by Military)

Sir A. Southby: asked the Secretary of State for War, whether he will take steps to convey to the military personnel who have carried out the duties of those transport workers who have elected to go on strike at a time of great national anxiety the sincere gratitude of the public whose requirements have been guaranteed by their courteous service.

Sir J. Grigg: While thanking my hon. and gallant Friend for the terms of his Question, I hope he will agree with me that it would hardly be appropriate to single out these troops from the rest of the Army for special commendation.

Sir A. Southby: Can my right hon. Friend say whether it is not the view of the officers and men of the army that these transport and other workers who have gone out on strike, regardless alike of the nation's necessities and the instructions of their own union officials, have done more to help the enemy than any "fifth columnist" paid by Hitler?

Mr. W. J. Brown: Are we to understand that the use of troops as strike breakers is the policy of the War Office?

Mr. Shinwell: Will the right hon. Gentleman see that for their services, these men are automatically granted the vote?

Burma Operations

Captain Gammans: asked the Secretary of State for War to make a statement on the war in Burma.

Sir J. Grigg: I am afraid not.

Captain Gammans: When is my right hon. Friend likely to have this information?

Sir J. Grigg: I am afraid I cannot say that, either.

Colonial Troops (Corporal Punishment)

Mr. Sorensen: asked the Secretary of State for War what alterations it is proposed to make respecting the infliction of corporal punishment on West African and East African soldiers; and the number of such punishments given during the preceding two years.

Sir J. Grigg: I am not yet in a position to add anything to the replies given on this subject last Tuesday and Wednesday.

Mr. Sorensen: Why should it take such a long time to make a very simple decision of this kind?

Sir J. Grigg: It is not so simple as all that. Inquiries have to be made.

Mr. Sorensen: But the information is in the possession of the right hon. Gentleman, and the only decision is whether a punishment not inflicted upon other troops should be inflicted upon these troops.

Mr. Shinwell: When is the right hon. Gentleman going to make up his mind? Why is it necessary to have an inquiry into the question of whether men should have corporal punishment inflicted upon them? Cannot the right hon. Gentleman make up his own mind?

Sir J. Grigg: I am entitled to consult—in fact I should be foolish not to consult—the people under whose command these troops are serving.

INVADING ARMIES (PURCHASING POWER)

Mr. A. Edwards: asked the Secretary of State for War what steps he proposes to take with regard to both a limitation

and a control of the purchasing power of the Allied Armies in liberated territories of Europe.

Sir J. Grigg: It would not be in the public interest to say in advance what steps are proposed in the direction desired by the hon. Member. The desirability certain circumstances of limiting and controlling the purchasing power of invading armies is fully appreciated by His Majesty's Government and by the Government of the United States of America. The Supreme Commander is also fully acquainted with the problem.

Mr. Edwards: In view of previous very serious mistakes in this matter, will the right hon. Gentleman keep in mind his recent statement about the danger of creating wild inflation?

Sir J. Grigg: The circumstances are completely different. In any case, I do not, in the least, admit the suggestion that the previous exchange rates have been fixed on wrong figures.

Mr. J. J. Davidson: Is it not a fact that, up to the present, the purchasing power of the British soldier has been very carefully controlled by the War Office?

Oral Answers to Questions — ARMED FORCES

Native Commissioned Officers

Mr. John Dugdale: asked the Secretary of State for War how many native commissioned officers there are in the Armed Forces of the Crown to-day.

Sir J. Grigg: I regret that this information is not available.

Mr. Dugdale: Would it not be possible to obtain it, because I have asked for it already from the Secretary of State for the Colonies, and he is unable to give it to me?

Sir J. Grigg: I am afraid I have not got it. I think it would take a very great deal of time and trouble to get it.

Mr. Sorensen: Is it so very difficult to give the number of commissioned and non-commissioned officers in the Colonial Forces?

Sir J. Grigg: It is not only a question of the Colonial Forces. I am not asked that Question. I am asked for the whole Forces of the Crown, and they are spread


out in a very large number of theatres of war.

Sir Herbert Williams: Is a Welshman in a Welsh regiment to be regarded as a native?

Mr. Keeling: Or an Englishman in an English regiment?

Overseas Service

Mr. De ht Bère: asked the Prime Minister if, whilst recognising the exigencies of service with the Forces he will state the broad principle which is applied to the granting of leave to members of the Forces who have served for three years overseas, without home leave.

The Deputy Prime Minister (Mr. Attlee): I would refer my hon. Friend to the answer which my right hon. Friend the Prime Minister gave on 22nd February last in reply to a Question by my hon. Friend the Member for Leigh (Mr. Tinker).

Mr. De la Bère: Can we have an assurance that the broad principle is under constant review, and that cases of hardship are really considered when men have not been able to see their families for three years?

Mr. Attlee: If the hon. Member will look at the answer I have given, I think he will find that that point is fully answered.

AUSTRIAN PRISONERS OF WAR

Mr. Mander: asked the Secretary of State for War whether it is proposed to separate Austrian prisoners of war from Germans, in view of the decision taken at the Moscow Conference.

Sir J. Grigg: Yes, Sir. This is done whenever it is administratively possible.

Mr. Mander: Are they in separate camps or in the same camp?

Sir J. Grigg: I am sorry, but I could not answer the hon. Member's question without notice.

Oral Answers to Questions — SCOTLAND

Teachers' Salaries

Mr. Malcolm MacMillan: asked the Secretary of State for Scotland when it is intended to introduce salary increases

for teachers in Scotland, in view of the need to attract the increased numbers of teachers required now and post-war, and in view of present underpayment hardships.

The Secretary of State for Scotland (Mr. T. Johnston): The National Joint Council to deal with salaries of teachers in Scotland has recently adopted a revised constitution under which it falls to me to appoint a neutral chairman; negotiations with both sides of the council with a view to securing an agreed nomination are at present in progress and I hope to make an announcement shortly. I shall then ask the council to frame, for my consideration, revised scales of salary, having regard to the recommendations of the Advisory Council on Education.

Mr. Gallacher: Is the Secretary of State aware that at a conference of prominent teachers on Sunday, it was stated that Scottish school teachers' wages were much lower than those of English school teachers? Will he see that Scotland, which is ahead in education, is also ahead in the payment of salaries?

Mr. Johnston: I cannot, without notice, vouch for the information which my hon. Friend has given me.

Hydro-Electric Power Scheme

Mr. M. MacMillan: asked the Secretary of State for Scotland whether he will make a statement on progress made by the Scottish Hydro-Electric Board; and where the first schemes are to be undertaken.

Mr. Johnston: The development scheme of the North of Scotland Hydro-Electric Board has, as the Hon. Member is aware, been approved by the Electricity Commissioners and confirmed by me. I understand that the Board's first constructional scheme, if approved by the Electricity Commissioners will be submitted to me for confirmation at an early date. Information will then be published as to the site of the projects covered by the scheme; and the scheme itself will be available for inspection at the Board's offices and at other convenient places and will be placed on sale.

Mr. J. J. Davidson: asked the Secretary of State for Scotland whether contracts on work connected with the


Scottish Hydro-Electric Power Scheme are being issued in the near future; and whether he has taken any specific steps to ensure that Scottish firms have an opportunity of tendering for such contracts.

Mr. Johnston: The placing of contracts by the North of Scotland Hydro-Electric Board for constructional work will arise when their first constructional scheme—which I understand is likely to be submitted to me at an early date—has been confirmed. I am assured that the Board intend, so far as tendering may be possible, to give Scottish firms an opportunity to tender for such contracts.

Mr. Davidson: In view of the fact that this scheme will be projected at a very early date, will my right hon. Friend take definite steps to see that contracts are not handed out 400 miles away, when they could be carried out on Scottish territory, by Scottish organisations?

Mr. Johnston: Certainly; that is the point of my answer.

Mr. Boothby: Is the scheme of a substantial nature?

Mr. Johnston: I do not want to say anything about the scheme until it is published.

Mr. McKinlay: Will my right hon. Friend make it clear that firms having a brass plate in Edinburgh, are not necessarily Scottish firms?

Mr. Johnston: That may be so, but it does riot bar those and other firms from tendering.

Post-war Reconstruction

Mr. Davidson: asked the Secretary of State for Scotland whether he intends to convene, at an early date, a meeting of all Scottish Members of Parliament al St. Andrews Place, Edinburgh, in order to discuss a comprehensive statement by himself, on the steps taken, up to date, on post-war reconstruction for Scotland.

Mr. Johnston: Recent experience has shown that under war-time travelling restrictions meetings in Edinburgh are not convenient for a number of members, but I am always prepared to endeavour to arrange a meeting either in Edinburgh or London if a general desire for such a meeting is manifested through the usual

channels. Meantime I am sending my hon. Friend copies of recent reports by the Council on Industry.

Mr. Davidson: May I ask if the right hon. Gentleman is aware that the main purpose of this Question is to get a clear-cut, comprehensive statement from the Secretary of State on the question of post-war reconstruction, and the steps taken up to date, in view of the grave anxiety now being expressed in many responsible quarters in Scotland that nothing very much is to be done for that country?

Mr. Johnston: I do not accept the last sentence in the slightest degree. A great deal has been done but the Question was whether I would summon a meeting in Edinburgh. I have answered by saying that I am prepared to summon a meeting, either in Edinburgh or in London, if a request is made through the usual channels.

Caledonian Canal

Mr. M. MacMillan: asked the Secretary of State for Scotland whether he has considered the suggestions sent to him by the Lochaber Labour Party regarding the reconstruction and extension of the Caledonian Canal to accommodate and allow through passage of seagoing shipping from coast to coast; and if he will make a statement.

Mr. Johnston: I have brought the resolution in question to the notice of my Noble Friend the Minister of War Transport, and of the North of Scotland Hydro-Electric Board and the Scottish Council on Industry, but I am not in a position to make any statement in regard to it, beyond saying that these and other proposals relating to the Caledonian Canal are at present under consideration.

DOMINION PRIME MINISTERS (WAR CABINET MEETINGS)

Mr. Granville: asked the Prime Minister whether, during the coming Commonwealth Conference, the visiting Dominion Prime Ministers will be invited, in accord with precedent, to become members of the War Cabinet, or whether the meeting of the Dominion Prime Ministers will constitute a supreme Empire War Cabinet.

Mr. Attlee: It is the intention to invite the Dominion Prime Ministers, during their stay in this country, to attend meetings of the War Cabinet not concerned with purely United Kingdom affairs, as well as the special meetings of the Conference of Prime Ministers which form the staple of our work.

Mr. Granville: Is it not constitutionally correct to say that a meeting of Dominion Prime Ministers, with the Prime Minister of this country, does, in fact, under the Statute of Westminster, become an Empire Council?

Mr. Attlee: I should like to see that on the Paper.

GOVERNMENT POLICY (CONSULTATION WITH MEMBERS OF PARLIAMENT)

Mr. Bellenger: asked the Prime Minister whether he is aware that a repre1.entative group of members of Congress has been set up to advise and help with the formulation of plans for the maintenance of peace; and whether he proposes to inaugurate a system whereby representative Members of this House can assist the Executive in such matters on which it is desirable to enlist the active co-operation of all political parties and groups.

Mr. Attlee: The answer to the first part of the Question is, "Yes, Sir." As regards the second part, I do not at present see any reason to change the existing system whereby His Majesty's Government are able to take advantage of many valuable suggestions made by hon. Members at Question Time, in the course of debate, and in other ways.

Mr. Rhys Davies: What becomes of this position when His Majesty's Government take no notice at all of what hon. Members may say?

Mr. Shinwell: Is my right hon. Friend aware that we appreciate very much his tribute to hon. Members at Question Time?

CASSINO OPERATIONS (DESPATCHES)

Mr. Bellenger: asked the Prime Minister whether his attention has been called to the publication of a despatch to the New Zealand Government by General

Freyberg, G.O.C. New Zealand Corps, on the operations at Cassino; and whether any despatch has been received by the Government from the G.O.C. British Troops.

Mr. Attlee: The answer to the first part of the Question is, "Yes, Sir," and to the second part, "No, Sir."

Mr. Bellenger: Does not my right hon. Friend agree that it is somewhat incongruous that a subordinate commander can send a despatch to his own Government, parts of which are published, and yet the supreme commander sends no despatch? Will he consult the Prime Minister, so that we can have a rather better explanation of why the public are not allowed to see some of these despatches?

Mr. Attlee: The point is that the general officer commanding the troops of a Dominion has the right to report to his own Government in despatches, and the question of despatches being published here is another matter. Perhaps my hon. Friend will put down a specific question on that.

Sir Herbert Williams: Is not the refusal to publish despatches in this war due to a desire to cover up blunders?

MARRIED WOMEN (NATIONALITY)

Commander King-Hall: asked the Prime Minister whether he will take steps to ensure that the disabilities under which British married women suffer under the British Nationality and Status of Aliens Acts will be given consideration at the forthcoming conference of Dominion Premiers.

Mr. Graham White: asked the Prime Minister if it is his intention to ascertain the views of the Prime Ministers of the Dominions on the subject of the nationality of married women during the forthcoming Dominions Conference.

Mr. Attlee: The forthcoming meeting is a personal meeting of Prime Ministers for discussion of broad issues of policy arising out of the war. I do not think that the question which my hon. Friends have in mind could appropriately be discussed.

Mr. Pethick-Lawrence: The Deputy Prime Minister will realise that this is a


question of practical significance, which cannot be left indefinitely in cold storage. Can he give an assurance that, if this question will not be discussed at immediate meetings, the Prime Ministers will, at least, be asked to discuss the matter in their respective Dominions, with a view to a discussion at their next joint meeting and a decision being arrived at?

Mr. Attlee: That is rather another matter, and I would like to consider it.

Commander King-Hall: In view of the fact that, a year ago, the Government said they were anxious to take further opportunities of consultation, does the right hon. Gentleman not agree that something might by now have been done; and can he say when they will do something about it? Is there any hope of anything happening?

Mr. Attlee: I cannot add anything to the statement I have already made.

Mr. W. J. Brown: Are you aware, Mr. Speaker, that the length of the supplementary question put just now from above the Gangway exceeded by a second and a half the length of the supplementary question of mine which you ruled out of Order because of its length?

BRITISH BROADCASTING CORPORATION (CHAIRMANSHIP)

Sir Edward Grigg: asked the Prime Minister whether he can now make an announcement regarding the chairmanship of the B.B.C.

Mr. Attlee: The King has been pleased to approve the re-appointment as Chairman and Governor of the British Broadcasting Corporation of Sir Allan Powell, whose term of appointment recently expired. In order to ensure continuity of policy at the present time, Sir Allan Powell consented to serve for such further period as may be decided.

Captain Plugge: Can the right hon. Gentleman say if, when making changes in the Board of Governors of the B.B.C., he will consider appointing a qualified radio engineer on that Board, so that that side of the service can be represented?

Mr. Attlee: That is one of the questions, information on which we should like to consider.

Mr. Gallacher: Will the right hon. Gentleman also consider the whole character of the programme?

INVENTIONS (OFFICIAL ENCOURAGEMENT)

Captain Plugge: asked the Lord President of the Council whether, after the war, arrangements can be made to pay greater official attention to claims of potentially useful inventions which may not, for the moment, have any commercial value.

The Lord President of the Council (Mr. Attlee): I would refer the hon. and gallant Member to the statement I made in the course of the Debate on 19th April, on the motion of the hon. Member for Pudsey and Otley (Sir Granville Gibson), in which I dealt with this matter.

Oral Answers to Questions — NATIONAL FINANCE

Treasury Deposit Receipts

Mr. Stokes: asked the Chancellor of the Exchequer what amount of Treasury deposit receipts held by the banks had been converted to long term loans by 15th February, 1944, or near date.

The Chancellor of the Exchequer (Sir John Anderson): The amount of subscriptions to long-term loans—that is, Savings Bonds—covered by repayments of Treasury Deposit Receipts before maturity up to the 12th February, 1944, was £237,000,000.

Mr. Stokes: May I ask whether, in view of the fact that bringing new money for circulation in this way costs the community a great deal, the right hon. Gentleman will consider raising the money himself instead of leaving it to the banks to do it?

Sir J. Anderson: I think I answered a Question uncommonly like that last week.

Mr. Stokes: Yes, but most unsatisfactorily.

Sir J. Anderson: That is another matter.

Income Tax

Mr. Thorne: asked the Chancellor of the Exchequer how much of the Income Tax was unpaid at the end of the year 31st March.

Sir J. Anderson: I think I should reserve until later in the day any remarks I may have to make about the national finances.

Mr. Thorne: Should not hon. Members know what amount of Income Tax has not been paid up to the end of March?

Sir J. Anderson: I shall be having something to say later about what has been paid, and I think that will answer the hon. Member's Question.

Social Services (Cost)

Sir Waldron Smithers: asked the Chancellor of the Exchequer, with regard to Acts of Parliament dealing with public and social services, approximately what percentage of their cost falls on the taxpayer and ratepayer, respectively.

Sir J. Anderson: Particulars of the receipts from which expenditure on the public social services is met have not been collected since the war, and I fear that staff is not now available for this purpose. The latest figures, published in November, 1938, are those relating to the financial year 1936, and I am circulating with the OFFICIAL REPORT a table showing the percentages of the receipts in that year drawn from various sources.

Sir W. Smithers: Might I ask, in view of the fact that this House, by enactments, is putting increasing burdens on the ratepayers, if the right hon. Gentleman will set up a Commission of Inquiry to consider whether the raising of money by rates and by taxes could not be more, equitably distributed?

Sir J. Anderson: I think that hardly arises on the Question.

Mr. Rhys Davies: When preparing these statistics, promised in his reply, will the right hon. Gentleman take great care that in the total amounts paid on pensions, unemployment and health insurance, account is taken of the contributions from employers and employed, and that these are not mixed up with State grants?

Sir J. Anderson: The statement that is being prepared draws that distinction quite clearly.

Following is the statement:

The following table shows the sources of the receipts from which expenditure on the public social services was met in 1936,

and the amount and percentage of the receipts drawn from the various sources in that year.

Source
align="center">Amount
align="center">Percentage



£ millions



Parliamentary Votes
232
46


Local Rates and Block Grants*
123
24


Contributions, fees, interest, rents, etc.
449
30


Total
504
100


* The block grants are given as a contribution to local revenues and cannot be apportioned among the various services of which the cost is met from local revenues.

Sir W. Smithers: asked the Chancellor of the Exchequer what is the policy of the Government as to the percentage of the national income it is practicable and desirable to expend on public and social services.

Sir J. Anderson: As I informed my hon. Friend on 23rd March, I do not think the subject of his question lends itself readily to arithmetical rules.

Mr. A. Edwards: Will the Chancellor not agree that money spent on social services passes through trade and comes back into the national income?

Taxation and Borrowing

Sir W. Smithers: asked the Chancellor of the Exchequer approximately what percentage of the national income is employed through the twin agents of taxation and borrowing, respectively.

Sir J. Anderson: It is not possible to say what proportions of the Government borrowings represent respectively savings out of income and the investment of other funds. I would, however, refer my hon. Friend to Tables F and E of the new issue of the White Paper on the National Income, which will be published to-day. These Tables show that it is estimated that, in the calendar year 1943, tax liabilities amounted to 36 per cent. and net saving to 19 per cent. of all private income.

HANSARD (BOUND VOLUMES)

Commander King-Hall: asked the Financial Secretary to the Treasury what was the cost to a Member of the House


of Commons of the bound volumes of the House of Commons HANSARD for the Session 1943–44.

Mr. Assheton: For the Session 1943–44 two volumes have been issued to date at a price of 9s. 6d. and 10s. respectively.

Major C. S. Taylor: In view of the fact that hon. Members who try to carry out their duties conscientiously have to refer to HANSARD, which they have to read frequently at week-ends, does the right hon. Gentleman think it right that hon. Members should be put to this expense?

Mr. Assheton: My hon. and gallant Friend will recollect that the discontinuance, as a war-time economy, of the free supply of bound volumes was a recommendation of the Select Committee on Publications and Debates Reports.

Commander King-Hall: asked the Financial Secretary to the Treasury whether Members of the House of Lords receive the bound volumes of their Debates free of charge if they intimate their desire to receive these volumes.

Mr. Assheton: Yes, Sir.

Commander King-Hall: In view of the fact that members of another place receive HANSARD free of charge, will the right hon. Gentleman consider restoring this privilege, if hon. Members indicate their desire for it?

Mr. Assheton: I admit that this is an anomaly. Of course, there are other anomalies; for example, Members of another place do not receive salaries.

Mr. A. Bevan: In view of the answer now given by the Financial Secretary to the Treasury, that Members of another place are not paid salaries and therefore receive free bound volumes of HANSARD, do we now understand that the issue of free bound volumes constitutes a payment to the House of Lords? Are they now in receipt of salaries?

Mr. Assheton: I merely mentioned an example of other anomalies.

Mr. Bevan: But are they now in receipt of salaries?

Major Woolley: Can the right hon. Gentleman say how many hon. Members subscribe for these bound volumes and how much is saved annually?

Mr. Assheton: I have not the figures of how much is saved annually, but 62 hon. Members now purchase the bound volumes.

Mr. Shinwell: In view of the dissatisfaction of hon. Members, particularly because of the opportunity afforded Members of another place to obtain volumes free, will the right hon. Gentleman reconsider the matter, so that hon. Members, if they so desire, may have them?

Mr. Assheton: I will certainly examine it again.

LOCAL AUTHORITIES' SURPLUS FUNDS (INVESTMENT)

Mr. Sorensen: asked the Financial Secretary to the Treasury what are the difficulties preventing local authorities from lending any surplus funds to the Treasury free of interest; and whether he is taking any steps to enable local authorities to do this if they should so desire.

Mr. Assheton: Local authorities, as trustees for the ratepayers, have a duty to invest surplus funds and to secure interest on them. Failure to invest surplus funds would render the authority liable to challenge at audit or otherwise by any ratepayer. It is not considered desirable to take any steps to alter this position.

Mr. Sorensen: Do we now understand that, if some local authority has a surplus, and even if it wishes to lend it to the Government, it is precluded from such patriotic action, and that no attempt is made to assist it in this direction?

Mr. Assheton: I have nothing to add to what I have already said.

Oral Answers to Questions — COAL INDUSTRY

Porter Awards (Cost)

Mr. Keeling: asked the Minister of Fuel and Power the estimated annual cost of the Porter Awards on overtime and holidays with pay, respectively, in adition to the £5,000,000 per annum announced as the approximate cost of the minimum wage award.

The Minister of Fuel and Power (Major Lloyd George): The information at present available is insufficient to enable a close estimate to be made, but an approximate


estimate of the annual cost of the Porter Awards on overtime and holidays with pay is £5,000,000 and £1,500,000.

Mr. Foster: Is the Minister aware that over £5,000,000 has been paid out of this Fund to the colliery owners, where the collieries have become necessitous undertakings?

Managers (Power of Suspension)

Mr. Colegate: asked the Minister of Fuel and Power whether he has considered the letter, dated 10th March, addressed to the Controller General by the Mining Association of Great Britain, informing him that the mining association supported the representations of the National Association of Colliery Managers that colliery managers should be given the power to suspend workmen temporarily for reasons of a disciplinary character without the payment of the guaranteed wage; and what action he has taken upon it.

Major Lloyd George: Yes, Sir. The letter referred to by my hon. Friend expresses a different view however from that given to me by the Mining Association three months earlier. On 22nd December, 1943, the President of the Mining Association stated that that body felt some concern at the proposal that colliery managers might have power to suspend employees for a period of three days, without pay, for breaches of pit discipline, and that while he could see advantages in the proposal under peace-time conditions, he was not sure that it would be beneficial in war-time. The attention of the Mining Association has been directed to the contrary advice given to me by them on this matter, and the Association has been informed that I am not prepared to pursue this matter further for the time being.

Mr. Gallacher: Could not the Minister consider indefinitely suspending the mine-owners as being one sure way of getting discipline?

Necessitous Undertakings

Mr. Foster: asked the Minister of Fuel and Power the average output per man-shift at those collieries which have become necessitous undertakings in the Lancashire coalfield and the average figures for the other collieries in that district.

Major Lloyd George: During the 13 weeks ended 1st April, 1944, the output of saleable coal per manshift worked was 15.66 cwts. at the necessitous undertakings in Lancashire and 17.36 cwts. at the rest of the collieries in that district.

Mr. Foster: Is the Minister aware that when a colliery becomes a necessitous undertaking, the incentive of profit has ceased to exist?

Mr. Foster: asked the Minister of Fuel and Power the reasons for an increasing number of collieries becoming necessitous undertakings; and what steps he is taking to deal with this situation in view of the falling output at such collieries.

Major Lloyd George: There has actually been a slight decrease in recent months in the number of colliery undertakings receiving assistance. During the same period output at the necessitous undertakings, whether taken as a whole or in Lancashire only, has shown an increase.

GAS AND ELECTRICITY METER RENTS

Mr. De la Bère: asked the Minister of Fuel and Power whether, in view of the widespread system of charging meter rents by gas and electricity undertakings, he will investigate the system adopted by similar American undertakings as regards the supply to the consumer and make a statement to the House.

Major Lloyd George: I have no detailed information about the practice of American gas and electricity undertakings in regard to meter rents, but I am having inquiries made.

Mr. De la Bère: Will the right hon. and gallant Gentleman bear in mind that we are very anxious to have something done about these matters here?

FUEL ECONOMY

Mr. Rhys Davies: asked the Minister of Fuel and Power whether, in imposing fuel restrictions on shops and offices, he will take into account the necessity of drying the clothes of the workers involved during wet weather.

Major Lloyd George: I regret that in view of the need for further reduction in


fuel consumption, I cannot see my way to make the concession suggested, which would in any case be liable to abuse.

Mr. Davies: Is the Minister aware that there is an increase of absenteeism already, consequer t upon colds and ill-health among these people, because of the fact that they are unable to dry their clothes at work?

Major Lloyd George: I am not aware of that.

Mr. Davies: Do these restrictions apply to the clerks in the Minister's own office?

Major Lloyd George: They apply not only to a e clerks, but to myself as well.

Mr. W. J. Brown: asked the Minister of Fuel and Power whether he is aware that the transfer of the staffs of the registry and despatch sections of his headquarters office to bricked-up rooms has necessitated the use of 16 150/200 watt lamps throughout the clay; that the vacated accommodation in which artificial light during daytime normally was unnecessary is not to he put to constant use, but is reserved for occasional conferences; and whether, in the interests of fuel economy, he will agree to 'he representations of the staff side of hi:; departmental Whitley Council that these staffs should be transferred back to their previous rooms.

Major Lloyd George: The transfer of staff to new accommodation was made as the result o f representations from the staff themselves as to the unsuitability of the old accommodation and in the interests both of efficiency and of security. Artificial light was necessary during practically the whole of the day in the old accommodation, especially during winter months and the fluorescent lighting which has now been installed in the new accommodation is not only superior but is considered on balance to result in a saving of consumption of electricity.

ROYAL AIR FORCE (FLYING BADGES)

Mr. Pritt: asked the Secretary of State for Air whether he is aware that numbers of men who, after qualifying in the R.A.E. to wear wings, have been grounded sod discharged from the R.A.F. without fault on their part are forbidden to wear their wings when subsequently

called up for service in the Army, and that this is causing much disappointment and distress; and whether he will now permit them to wear the wings which they have earned.

The Joint Under-Secretary of State for Air (Captain Harold Balfour): Flying badges are awarded on a provisional basis on completion of basic training and are not considered to have been fully earned, until the holder has been engaged in productive flying. If a pilot is withdrawn from aircrew duties, the question of his retaining or relinquishing the badge is considered in relation to the cause of withdrawal. The badge is, normally, relinquished by personnel withdrawn from flying duties before becoming engaged on productive flying, and by personnel who have failed to carry out their flying duties satisfactorily. I see no reason why these rules should be changed.

Mr. Pritt: Will the right hon. and gallant Gentleman consult with the Secretary of State for War, to whom I originally put down this Question, and see why Army Council Instructions are being given taking off the list whole batches of men without any apparent regard to the different circumstances under which the badges were granted?

Captain Balfour: No, Sir. If the hon. and learned Gentleman wants to question Army Council Instruction 660–40, he should put down a Question to the Secretary of State for War.

Mr. Pritt: I did put down a Question to the Secretary of State for War and the right hon. and gallant Gentleman took it over; and will he please consult with his right hon. Friend and intimate the answer?

Wing-Commander Grant-Ferris: Is it riot a fact that the award of wings is looked upon as a decoration, and is it not wrong for the Army to deprive these men of the badge?

Captain Balfour: Wings are given provisionally when someone is undertaking basic training. They are not considered to be fully earned, until the man has justified himself in productive flying, and if someone has failed at the end of his training, there is no reason why he should go on through the rest of his Service life wear-


ing wings which intimate that he has done productive flying when as a fact he has not done so.

Mr. Pritt: Will the right hon. and gallant Gentleman make inquiries into the case in which there were men who had done productive flying, and will he inform the House why he takes a Question away from the Secretary of State for War and then blames me for not asking the Secretary of State for War?

Captain Balfour: I do not blame the hon. and learned Gentleman at all. If he can give me any individual cases, I will look into them, in relation to the general principle which I have stated in my reply.

EDUCATION BILL (RE-PRINT)

Mrs. Cazalet Keir: I desire to ask you, Mr. Speaker, a question of which I have given you notice, namely, Why, in the re-printed copy of the Education Bill, as amended in Committee, the Clauses after Clause 82 are wrongly numbered, the number "83" being given to a Clause left blank except for the marginal note?

Mr. Speaker: I regret that an obvious error has been made in re-printing the Education Bill, with the result that the Clauses after Clause 82 are wrongly numbered, 83 being given to a blank space for a Clause which was omitted in Committee.
A further re-print of the Bill does not seem justified owing to the amount of paper that would be required for this purpose; and it is suggested that, for the purposes of debate during the Report stage, the best method would be to accept the numbers printed against the Clauses as though they were correct.

Mr. A. Bevan: You, Mr. Speaker, will note that on other occasions mistakes of a similar character to this have resulted in the re-committing of a Bill, and will you therefore add to your Ruling that, in no circumstances, will this action on your part be taken as a precedent?

Mr. Speaker: Certainly. I have looked into the matter very carefully and I am satisfied that this is a genuine mistake.

QUESTIONS TO MINISTERS

The following Question stood upon the Order Paper in the name of Sir AUSTIN HUDSON:
To ask the Minister of Information if he will take steps to see that London newspapers and the B.B.C. do not announce after an air-raid that a hospital has been hit, as this results in every hospital in London being rung up on the telephone by friends and relatives of the patients in order to find out whether it is the one in question.

Sir A. Hudson: In view of the fact that we are shortly to suspend the Sitting, would it be possible to take Question No. 74 as the Minister is here, and I believe the information in reply to it may be of importance?

Mr. Speaker: The answer no doubt will be circulated in due course, and I am not prepared to alter the rule.

BUSINESS OF THE HOUSE

Mr. Granville: May I ask the Leader of the House whether, in view of the fact that a large number of Members are interested in the Adjournment discussion, he can indicate what time it is intended to conclude the general Debate on the Budget Resolutions to-day?

The Secretary of State for Foreign Affairs (Mr. Eden): It is not a matter that is in my hands; it is entirely in the hands of the House.

Orders of the Day — WAYS AND MEANS

Considered in Committee.

[Major MILNER in the Chair]

FINANCIAL STATEMENT

The Chancellor of the Exchequer (Sir John Anderson): During the war it has been the practice of the Chancellor of the Exchequer to set his story of revenue and expenditure in the framework of a broad review of the financial policy of the Government and then to announce his taxation proposals for the coming year. It is clearly convenient that the Budget proposals should be seen against this wider background, and I shall follow the established practice, but, with the permission of the Committee, I propose, on this occasion, to alter somewhat the order of the statement.

Sir J. Anderson: Certainly. The plans which my colleagues and I are preparing for the days after the war are based on the assumption that we shall be in a posi-


tion to import the raw material necessary for active employment and sufficient food to maintain a standard at least a little better than what we are enjoying now. It is right that this should be our assumption, for we intend to make it good. It is also right that I should warn the Committee that we shall start with no solid or realised basis for it, given the sombre background which I have described. A nation of sound heart should find such a situation stimulating. I take it as a challenge to the industry of this country.
My flank recoils, my 'centre yields. Excellent! I attack 
Marshal Foch is supposed to have said on a famous occasion. The burdens are large and, indeed, our initial debit balance may be larger than the figures I have given. But the productivity of this country is also large, and we can carry this burden in due time if we make an effort. It will not be a light effort, especially after the endurances of the war. Our only means of doing so will be by our own goods produced here at home. We have no other resources available.
When the war ends there will be a demand all over the world for goods, and if we decide to give a reasonable and proper priority to the imperative needs of our export trade, we shall not find much difficulty in selling. But we must not abuse that opportunity by taking a short view. Our aim must be to re-establish old connections and develop new ones which are likely to be of enduring value, rather than to snatch quick gains in a seller's market. Speaking as Chancellor of the Exchequer, I am more concerned to see a steady and rising income from our exports than to build up, possibly on an unstable basis, a temporarily improved position of our foreign exchanges. The renewal of a contract to-morrow is worth more to me than the last penny out of to-day's contract.
I used a phrase a moment ago that all this should be a challenge to the vigour, the initiative and the adaptability of our industry. Four and a half years ago a much graver challenge was thrown down and was accepted. Looking back over the industrial history of those years, I believe that the most important fact that stands out is the inventive boldness and enterprise of our industrialists, our scientists and our technicians, and the adaptability

of our workpeople. We must, I think, always be a country predominantly of high-grade products, for otherwise we throw away part of our inherited technical industrial skill. Our high-grade products can only hold their own and find their markets if we keep our light shining a little ahead of the rest. Competition in industrial and technical inventiveness is the finest competition of all, and it is the one most beneficial to the world. There will be no easy money in the export trade, but there will be good money and secure money for the benefit of our people if the same drive is applied to the problems of the export trade as has been applied to the problems of the war. Nor will the urgency be much less.

TAXATION OF INDUSTRY: EXCESS PROFITS TAX

What I have just said shows the vital importance of looking ahead to the health of our industry, and what I have to say now is concerned mainly with questions of post-war industrial taxation. Before coming to that, I would like to turn for a moment to a feature of war-time taxation which has been the subject of repeated representations to me as regards its effect on industrial enterprise—that is, the Excess Profits Tax.

I have had this matter under most careful review. Many of the complaints regarding the incidence of Excess Profits Tax are really criticisms of the rate of the tax, for the 100 per cent. rate takes away the whole of the profit above the standard, and leaves no margin to bear the unevenness of incidence which is inevitable in any taxation of this kind. I cannot, however, entertain any suggestion for the reduction of the Rio per cent. so long as hostilities last. As has been more than once said by my predecessor, the 100 per cent. rate springs from other considerations than those of purely fiscal policy, and these other considerations remain to-day in full force.

I must remind those who complain of the rate, that the law has made special provisions for the refund, after the end of the war, by way of a post-war credit, of 20 per cent. of the net amount of taxation paid at the 100 per cent. rate. This credit was originally provided for in the Finance Act, 1941, subject to such conditions as Parliament might hereafter deter- mine. In the Finance Act, 1942, the promise of the repayment was made more


definite by indicating that the conditions governing payment would be "conditions relating to the distribution, application or capitalisation of profits for the benefit of shareholders by way of dividends or bonus share distribution." It is quite clear that all trading concerns that have to face postwar expenditure on rehabilitation and reconstruction or, indeed, that have to race capital expenditure of any kind whatever, can look forward with absolute certainty to having their post-war Excess Profits Tax credits available for the financing of such expenditure. Allowing for the Income Tax payable on all refunds of Excess Profits Tax, the post-war credit represents, net, a sum of 10 per cent. of the annual produce of the 200 per cent. rate of tax, and this represents a fund growing at the rate of £40,000,000 to £50,000,000 a year. The availability, after the war, of such a fund must obviously be a great factor in enabling industry to turn 'back to peacetime production, and to face any expenditure involved therein. While I recognise that the payment, as the law stands, is contingent, I think industry may safely leave the future to the wisdom of Parliament, and be content with the assurance, already given in the Statute, as enabling it to count on the post-war credit being available to finance post-war expenditure.

As regards the general basis of the charge, as distinct from the rate, I have had many representations. To discuss them in detail would be a lengthy process, for which I will seek some later opportunity. The Committee may be prepared, for the moment, to accept my asurance that I have thought very carefully about this matter, and to hear very briefly what I propose. It is a modest relief, especially important to small businesses, for those cases, of which there are thousands, where some standard other than the profits standard applies. Subject to one qualification, which I shall mention in a moment, I propose that, as from the 1st of this month, all standards, except profit standards, should be increased by £1,000. This increase will apply to the cases where the standard is a minimum standard, or the personal working-proprietor standard, or a standard representing a percentage on capital employed in the business. It will benefit no less than 30,000 small businesses, 10,000 of which will pass out of charge.

The qualification which I mentioned is this: Speaking generally, deficiencies of profits below the standard in any accounting period work either backwards or forwards, as a debit against the excess profits of another period. Deficiencies due to this new relief will work forwards and not backwards; that is to say they can be set against excess profits of future periods but not against excess profits of past periods. Largely arising out of this relief, a strengthening of the provisions of Section 35 of the Finance Act, 1941, dealing with the avoidance of taxation, will be required.

If I say no more at this juncture about this duty as a whole, it is because, as I have said, I hope to find an opportunity for a more elaborate statement later. I have taken into account the cost of this adjustment of the Excess Profits Tax in the Estimates, which I will give the Committee later of the yield of revenue in the current year. Only a small part of the cost falls this year, because the adjustment and collection of Excess Profits Tax necessarily lag behind the completion of the traders' accounting year. The cost in a full year will be £,12,500,000.

REVIEW OF 1943–44

I begin with the out-turn of the financial year that has just closed. In his Budget of a year ago, my predecessor estimated that the total expenditure would amount to 5,756,000,000, of which:.1,900,000,000 represented Vote of Credit expenditure. Since overseas disinvestment—an ugly word—was expected to provide £600,000,000 in the year, he was left with a total of £5,156,000,000 requiring what I may call domestic finance. Towards that sum it was estimated that the year's revenue would provide 2,907,000,000, leaving £2,249,000,000 to he covered by borrowings at home. On the confident assumption that private savings would show an appreciable increase over the previous year, he concluded that we should be able to borrow that large sum without departing from the sound lines which the country had hitherto followed. The Committee


will be glad to know that, in the result, the past year's finance made a better showing than Sir Kingsley Wood then expected.

EXPENDITURE IN 1943–44

The total issues for the year were £5,799,000,000, or £43,000,000 more than the Budget estimates. The £375,000,000 provided for the debt charge covered the whole of our interest liability and left £10,000,000 towards the contractual Sinking Funds. Supply other than the Vote of Credit required £6,000,000 less than the Budget estimate, despite Supplementary Estimates introduced during the year for some £6,000,000, mainly for the supplementing of old age pensions and supplies of clothing to Russia. The total issues out of the Vote of Credit were £4,950,000,000 compared with the Budget estimate of £4,900,000,000, which estimate, however, excluded whatever might be the year's expenditure on war damage. Vote of Credit expenditure for the year was thus, as the Committee will see, remarkably close to the estimate.

REVENUE IN 1943–44

On the Revenue side, the actual receipts from Income Tax at £1,184,000,000 were £9,000,000 more than the estimate; while Excess Profits Tax realised precisely the estimate of £500,000,000. The estimate for all the Inland Revenue duties together was £1,873,,000,000 and the actual receipts were £1,878,000,000, a difference of only £5,000,000. In the field of Customs and Excise, however, there was a substantial divergence from the Budget expectations, the actual total receipts showing a surplus of £67,500,000 over the estimate of £975,500,000. Two main factors explain that divergence. First, in the face of the additions made a year ago to the already heavy taxation of beer and tobacco, the consumption of both commodities has shown a remarkable and unexpected resilience, particularly in the case of beer, which yielded a surplus of no less than £18,000,000 over the estimate. The second factor is that the produce of the oil duties is very largely conditioned by the rate of consumption by the Armed Forces and that is, naturally, very difficult to estimate in advance. These duties have brought nearly £24,000,000 more than the estimate.

In the case of the Purchase Tax, which has hitherto been a very difficult item to

forecast, the estimate of £90,000,000 was exceeded by less than 2 per cent. There were, also, small surpluses under most of the other principal heads of Customs and Excise.

Miscellaneous revenue, as in previous years, is higher than the Budget estimate, because that estimate included, as I have already mentioned, the contributions and premiums under the War Damage Act.

The total revenue amounted to £3,039,000,000, which was £131,000,000 over the Budget estimate, and the excess of expenditure over revenue was £2,760,000,000 or £89,000,000 less than the Budget estimate—a deficit of £89,000,000 less than the Budget estimate.

BORROWING IN 1943–44

After allowing for certain capital receipts, the net sum we had to borrow during the year was £2,750,000,000, or £54,000,000 less than in the previous year. The manner in which that large sum was raised may, I think, be considered satisfactory, and, indeed, it made a somewhat better showing than in the previous year. I am pleased to be able to ask the Committee to note that the proportion if our borrowings represented by sales of National War Bonds and Savings Bonds to non-official holders, that is, the longer-term securities, increased from 31 per cent. to 34 per cent. I hope that this support of our longer loans may go on increasing. As has often been pointed out before, it would be of great advantage to the State after the war if as much as possible of our war borrowings had been for medium and long-term loans, with definite dates of maturity, rather than in forms repayable at short notice and having to be very frequently renewed.

I am also glad to say that the proportion we have been able to borrow in the form of small savings rose from 21 per cent. in 1942–43 to 25 per cent. last year. That is a result of which all concerned with the National Savings Movement have good reason to be proud, and I am sure I speak for all Members in saying that we are very grateful for all the efforts of the large army of voluntary workers in the Movement, and I hope that past achievement may be a spur to still greater efforts and further success in the future, for the need will be no less than it is now. Small osavings are usually firm savings. Experience has shown that once the habit of


putting something by has been started, the old Victorian virtue of thrift comes into its own again.

SOURCES OF FINANCE IN 1943–44

My last remarks related to the form of our borrowing in the past year. As the Committee knows, it has been a feature of our recent war Budgets to examine how far the sources from which we have borrowed have been satisfactory and, for that purpose, we take our guidance from the White Paper on national income which will shortly be in the hands of Members.

THE NATIONAL INCOME WHITE PAPER

I should like to say, if the Committee will allow me, a few general words about that Paper, although I hasten to reassure the Committee that I do not intend to try to lead them through all its statistical intricacies. One of my advisers has expressed the hope that we may eventually achieve" joy through statistics." Well, it may be so, but in any case the White Paper is a rich and well assorted feast of figures which I commend to the attention of the Committee.

But the Paper, whose previous editions have been well received, has a much wider significance than merely to serve as an appendix to the Budget statement. For the purpose of a policy of full employment it will be necessary, year by year, to bring under review the income and expenditure not only of the Exchequer, but of the country as a whole, and not only its income but its capital expenditure and its savings. The Committee will be able to see from this Paper how closely related are the figures in it to the figures and explanations that I gave at the opening of this statement. Similarly, as the somewhat novel technique of this Paper is developed, I should hope that the Budget would increasingly be an occasion when the financial and economic health of the country as a whole can be reviewed, with a diagnosis of the causes of any unfavourable symptoms and a prognosis of the future, to explain the medicine or the tonic—or perhaps even the rest cure—which the Chancellor of the Exchequer in the future may be able to prescribe. I shall revert to this metaphor before I finish.

To return to the question of the sources from which our Budget deficit can be financed, the Committee is, I think, now familiar with the test we apply each year

in examining whether our total borrowings have remained within sound limits. The question is whether, broadly speaking, our borrowings have been covered by the total of overseas disinvestment, by personal and impersonal savings, and by the sums available for investment in the hands of the public and of various official funds. As in previous years, the figures for these items are not available for dates beyond the end of the last calendar year; but, having regard to the continuing upward trend of savings, if it can be shown that the balances and savings available from such sources during the calendar year 1943 were sufficiently large to cover the deficit in the financial year 1943–44, we may safely reckon that our finances have still remained on an even keel. From the figures contained in this year's edition of the White Paper on the national income, it is clear that the 1943–44 deficit was so covered, and I think I need only refer in detail to two items. Overseas disinvestment—and I apologise again for the word—[HoN. MEMBERS: "What does it mean?"] It means realisation of overseas investments and addition to external debt. Overseas disinvestment, which includes the still increasing sterling balances which the Dominions and other overseas countries leave in this country, was slightly higher in 1943 than in 1942. It was £55,000,000 higher than the figure of £600,000,000 assumed in last year's Budget. The other important item is the yield of private savings. While the net impersonal savings during 1943 remained at approximately the same level as in earlier years the gross savings were about £100,000,000 below the Budget estimate, owing to a fall of that amount in the excess of tax liabilities aver payments. That fall was due to the fact that as the general level of profits is flattening out tax payments come to approximate more closely to tax liabilities over the year, and the figure for unpaid liabilities is, therefore, falling. On the other hand, personal savings—that is, the savings made out of the incomes of individuals—are estimated to have reached £1,490,000,000, as compared with £1,300,000,000 assumed in the Budget. The excess is in large measure due to the fact that as a result of later information the totals of personal savings in recent years are now put at higher levels than were given in last year's White Paper. As the totals of savings for 1943–44 must


have been somewhat larger than for the calendar year 1943 we can confidently assert the out-turn of the year 1943–44 was satisfactory.

PAY-AS-YOU-EARN

I must now refer briefly to a very important reform carried out during the past year by application of what we call "Pay-as-you-earn"on assessment and collection of tax on wages and salaries. The Committee will be glad to learn that all reports indicate that the new system has been successfully launched. This would be no mean feat at any time, but coming in war-time, when every additional item of work means so much to businesses that are short-staffed, I think the Committee will agree that our thanks are due to all concerned—workpeople, employers and Government staffs—for their co-operation in bringing the new system into force. In a measure such as this, which effects a revolution in the method of collecting tax from about 12,000,000 taxpayers, new difficulties and problems are bound to arise, but I have every confidence that after such a good start, and with the continued cooperation of employers and taxpayers themselves, the difficulties will be surmounted.

MINOR TAXATION PROPOSALS: CUSTOMS AND EXCISE

I turn now from the year which has just closed to that which has just opened. I have, in the first place, to propose a number of minor adjustments in Customs and Excise, and I will deal with these minor details as rapidly as possible. The first adjustment concerns the present margin of preference on sugar, which I propose to continue for a further period of two years from August next. These margins were established at their present level in 1926 and their original term of 10 years has subsequently been extended on various occasions, the last occasion being in 1942. The Government are under an obligation to give 18 months' notice of any change and it is convenient on this occasion as on the last to continue the margin for another two years.

A Clause will also be included in the Finance Bill to implement the undertaking, given in January last by my right hon. and gallant Friend the Secretary of State for the Colonies, that Parliament would be asked to increase from 360,000

tons to 400,000 tons a year the maximum quota of sugar which may be admitted at the special preferential rate for Colonial sugar.

The Committee will also be asked to pass Resolutions designed to raise the duty on beer by rd. per degree of gravity per barrel, but this is not to be passed on to the consumer. It is not a revenue change in the ordinary sense, but a small adjustment made in the light of the controlled prices of certain brewing materials. The Committee may remember that there was a similar adjustment last year.

Purchase Tax continues to yield a useful contribution to the national revenue, which at present I could very ill afford to forgo. There are, however, certain defects in the machinery for its collection which require remedying and I propose to include the necessary Clauses for this in the Finance Bill. Certain of them require a Resolution.

MINOR INLAND REVENUE CHANGES

In the field of Inland Revenue the Finance Bill will contain certain proposals for amendment of the law, some of which will necessitate Resolutions. These proposals, can, I think, best be considered when the Bill appears; it will contain the detailed provisions and opportunity for a general explanation will, no doubt, arise on the Report stage of the Resolutions. There is one, however, to which I should like to refer now. It concerns the taxation of lump sum payments made to authors for copyright. Under the existing law the lump sum payment is treated as income for the year -of receipt, even though the author may have spent some years on the work. With the present rates of taxation this may be very discouraging to literary effort, as was expounded recently by one of the leading figures in the literary world in a characteristically amusing letter to the Press. To meet this grievance the Finance Bill will contain provisions enabling an author, if he so desires, to spread a lump sum payment back over a period of three years, or the actual period of preparation of the work, if shorter. Although the proposal is essentially a measure of relief a Resolution is necessary on technical grounds.

MOTOR VEHICLE DUTIES

I informed the House early this year that I was reviewing the taxation of motor


vehicles and the fuel that they consume. At the present time, when it is almost impossible for me to sacrifice revenue, the first question that presents itself is whether there would be any advantage in altering the distribution of the total taxation from these sources as between the licence on the vehicle and the tax on the fuel. I have come to the conclusion that the balance of argument against this course is formidable. Whether, this being so, there should be any change in the way in which the vehicle tax is levied presents itself as the second question. It is, of course, clearly desirable that our manufacturers should not be hampered by the form of our taxation from adapting the design of their cars and engines to the circumstances likely to exist after the war. I find, however, that while everybody agrees that a reduction of taxation would be a good thing—and it is easy for anyone, except, perhaps, a Chancellor of the Exchequer, to agree to this—there is no such unanimity on the effect of motor taxation on design. I have in mind particularly the horse-power tax on private cars. That tax may have helped, along with many other factors which govern the conditions of motoring in this country, to lead to the development of a rather special type of engine for the home market. But it has also been a valuable form of protection against imported cars. I have an open mind on this subject myself, and if it is the considered view of the motor manufacturers that a change from the present horse-power tax to some other basis, yielding about the same amount of revenue, is desirable, that a change would be an advantage—for instance, a change to cubic capacity and possibly a change of taxation with a different graduation or with wider steps than under the present system—I would be ready to listen sympathetically to representations.

ARMORIAL BEARINGS DUTY

The Finance Bill will contain the proposal which I have already announced in the House, to abolish from 1st January next the Armorial Bearings Duty and the Carriage Licence Duty. The administration of these Duties is cumbrous and results in a number of anomalies which are certainly not justified by their yield. The greater parts of the proceeds go to local authorities which have concurred in the proposal to abolish the Duties.

BACKGROUND TO DOMISTIC FINANCE

I should like now to sketch the background of our domestic financial policy. I could not do so, however, without first paying my tribute to the soundness, courage and wisdom with which my predecessor, Sir Kingsley Wood, laid the foundations of that policy. He seemed to have the gift of knowing just how to introduce new and drastic measures in a manner so disarming that Parliament and the country were willing to assume at his hands the heaviest burdens of taxation ever laid on a free country almost as readily as if they were indulgences. Never in the history of this or any other country has a Chancellor of the Exchequer, or a Minister of Finance, carried such prodigious fiscal measures into force with so little opposition and even with general acclaim. High qualities of heart and mind made this possible, and the country owes him a very great debt.

The foundations of the policy which Sir Kingsley laid down can be briefly outlined. In the first place, we cover by taxation as much of current expenditure as we can. We do this for two purposes —to keep the future burden of debt within limits and to absorb current purchasing power which might otherwise press upon the prices of goods and services of which, the supply is restricted and which cannot easily he rationed. In the second place, we maintain such controls over the loan market that Government borrowings can be undertaken at a low and steady range of interest rates. The year's results indicate that once again this has proved compatible with an ever-increasingly successful savings campaign. Thus, Table II of the White Paper shows that personal incomes in 1943 were about £,600,000,000 above 1942 and that of this amount considerably more than half—L:385,000,000, in fact—was paid away in additional taxes and that more than one-third, namely, £221,000,000, was saved. The result is, as the Committee will see, that there has been no increase in what the public spent on consumption in terms of money, after allowing for indirect taxes and subsidies, in spite of a rise in prices, similarly reckoned, of about 2 per cent. Thus, in spite of a large increase in incomes the amount spent on consumption, in real terms, was actually reduced. This is a most remarkable achievement on the part of the faithful


public, an achievement which deserves to be made known to the whole world as a distinguished performance. The extraordinary readiness of the public to save, in spite of the tremendous volume of taxation, can be emphasised by another comparison. In 1938, before the war, 76 per cent. of personal income was spent on consumption. By 1942 the percentage had fallen to 58. One might have thought that that was the best of which human nature was capable. Nevertheless, in 1943 the percentage of personal income spent on consumption had fallen to 53. These percentages are estimated on a true basis, that is to say, eliminating the effect not only of duties but of subsidies. This great achievement in voluntary personal saving—the aggregate in terms of money last year was more than eight times what it was before the war—is the clue to the soundness with which it has been possible to conduct our public finances in time of war.

COST-OF-LIVING SUBSIDIES.

In the third place, we have aimed at maintaining a reasonable stability in the cost of living, partly by means of an intensive and successful rationing system, and partly by subsidising costs. Here, again, I can claim that our policy has been fully successful. But I cannot claim that in this field the position is so satisfactory that I need do no more than leave well alone, for I am not, I confess, altogether happy about the present trend of events. I must begin by reminding the Committee of what has happened in the three years since Sir Kingsley Wood explained the principles and conditions of the stabilisation policy in his Budget of 1941. This year's statistical White Paper shows that the cost, exclusive both of indirect taxes and of subsidies, of the whole body of goods and services which enter into consumption stood in 1941 at 29 per cent., and in 1943 at 38 per cent., above the pre-war level. The cost of living index, on the other hand, stood in 1941 at 28 per cent. above the pre-war level; and it stands at 29 per cent. to-day. Meanwhile the subsidies which have been necessary to maintain this stability have been increasingly costly. In 1940 we were spending 70,000,000 on subsidies; in 1941, as the result of the definite introduction of the stabilisation policy, the cost rose to £140,000,000. In 1943 the figure had risen to £190,000,000 and in the

current year the cost will be greater still. Without these subsidies the cost of living index, instead of being z8 per cent. over the pre-war level, would have probably reached about 45 per cent. above it on the average of the calendar year 1943, and it might reach so per cent. above it during this financial year.

These figures of increases are, in themselves, moderate. They contrast with the gloomy forebodings widely entertained in the first year of the war, when it was almost taken for granted that prices would go on soaring indefinitely, as they did in the last war, and that the money in our pockets would become worth less and less as time went on. I do not think, however, that anyone will deny that the benefits that we have gained hitherto from the stabilisation policy far outweigh its cost. Nevertheless, as I have said, I am disturbed at the trend of these figures. The maintenance of the stabilisation policy is as necessary and as beneficial as when it was first introduced, and the general principles underlying it are as sound as they were. But I am afraid we can no longer regard a cost of living figure of 25 per cent. to 30 per cent. above pre-war as sacrosanct, for the conditions laid down by my predecessor as necessary to the maintenance of this particular figure are now being imperfectly fulfilled. May I remind the Committee what Sir Kingsley said when he announced the stabilisation policy? He said:
I put this forward as a most important development of policy, and I hope we may thus create conditions which will enable the wages situation to be held about where it now is. It is clear that persistence of the tendency towards rising wage rates, which necessarily increase costs of production at every stage of the productive process, would compel abandonment of the stabilisation policy."—[OFFICIAL REPORT, 7th April, 1941; col. 1322, Vol. 370.]

WAGES SITUATION

What has happened to wage rates in the three years that have since passed? In 1941, wage rates were 21 to 22 per cent. above the level of September,;939. In 1943, the increase had reached 35 per cent. to 36 per cent. on the average of the year. To-day, the rise amounts to 4o per cent. This is the increase in wage rates. Earnings have, of course, increased considerably more. Thus, during the period over which the cost of living index has been rigidly stabilised, wage rates have risen by about 15 per cent. A number of these increases were necessary


to remedy anomalies in particular industries. No doubt other increases have been justified by a significant increase in the efficiency of labour, despite war-time handicaps, but there has been, in certain directions, an increase in the effective labour costs of domestic production. When the stabilisation policy was first introduced, wage rates had risen 6 per cent. less than the cost of living, but to-day they show a rise of 11 per cent. more than the cost of living. It would place the stabilisation policy in an altogether false perspective, and the purpose of it would to a large extent be stultified, if the Government were to continue blindly pouring out subsidies, to keep the cost of living down rigidly to a pre-determined level, without regard to the current level of costs and wages. The apparent ease with which the stabilisation policy has, so far, been carried out, must not be allowed to mislead people into taking it for granted. I should be failing in my duty if I did not remind the country of the vital link between wages and prices and warn them frankly that grave dangers loom ahead if the tendency to a general upward movement is not kept in check. It is equally important that industrialists should do everything they can, especially when they are taking war contracts, to keep prices as low as possible. [Interruption.] There may be some people who think that, because new techniques have enabled us to control prices and to maintain orderly distribution, inflation of incomes no longer matters. That is a fallacy. The more incomes are out of line with prices, the more it is necessary to intensify the most inconvenient forms of control. We all hope to see the end of rationing and other controls as soon as we safely can. We must make certain that, in the meantime, the volume of money incomes is not so swollen that the removal of controls would be attended by violent price inflation.

OVERSEAS PRICE-MOVEMENTS

The increased cost of domestic production is not, however, the whole explanation of the increased subsidies now being required to stabilise the cost of living. Some part of the explanation is to be found in the growing cost of imports, which affects particularly the food component of the index. It is one thing to subsidise prices in order to avoid the vicious spiral of inflation at home. It is

another thing to use subsidies without restraint, so as to increase the gap between domestic prices and world prices. Such a policy, if pushed too far, might create very great difficulties for us after the war.

REVIEW OF STABILISATION POLICY

These two developments are sufficient reason why the details of the policy must be looked at again. They are certainly not reasons against continuing a policy which has played so fundamental a part in the success of our domestic policy. It is the firm intention of the Government, as has been announced on other occasions, to maintain the policy, so long as they have the vital co-operation of all sections of the people, and to continue it on the same conditions during the transitional period when we are turning back once more from war to peace. We believe that one great element of anxiety can be removed from people's minds if they feel that they can rely on the Government maintaining the same firm control over prices to tide over the awkward problems of transition to normal civilian life as it has done during the war itself. The asset of stability will be hardly less valuable then than it is now.

While, however, I can give this solid assurance that the Government intend to maintain the policy as firmly as they have done hitherto, it would be wrong to bind ourselves to a rigid adherence for an indefinite period of time to the level which prices happened to have reached in April, 1941, at the time when the policy was inaugurated. I must have regard to the changing levels of wages, costs and prices, and must from time to time review the precise level at which stabilisation is to be continued in the light of current conditions.

When, as in the case of coal, wage costs, as far as not offset by increased output—that is an important point—have raised the actual cost of vital commodities, and when it is known to the whole country that costs of production are being still further increased by increases of wages, the stabilisation policy would become an altogether artificial affair if we were to attempt to mask these developments by making arbitrary reductions in the prices of other articles in order to maintain the level of the cost of living index unchanged. We have, therefore, felt it right that these in-


creases of price should he allowed to reflect themselves in the cost-of-living index in the natural way. I mention this now because, if and when this happens, I should not wish anyone to think that the situation had in any way got out of hand or that the Government were not still as firmly in control of prices or as firm in determination to maintain the stabilisation policy as they have been for the last three years.

Having regard to the higher domestic costs of production, and also to import costs, I feel that for the ensuing year a range for the cost of living index of 3o per cent. to 35 per cent. over pre-war should be substituted for the 25 per cent., to 3o per cent. laid down by Sir Kingsley Wood in 1941. This will only offset one quarter of the increase in wage rates which has occurred since he spoke and it is, I think, in a better and more stable relation to the current facts of wages and prices at home and abroad. I should add that while this should be regarded as the current range, the upper limit is a maximum only, and no substantial increase towards the new higher limit is' immediately in view.

EXTERNAL FINANCES AND THE BALANCE OF PAYMENTS

I now turn to the position of our external finances, which will become an increasingly important problem as the war draws to its close. Last year, Sir Kingsley Wood gave a general account of the factors in our external finances. I need not repeat this, but hon. members may find it useful to look at that story as a guide to the further chapter which I shall unfold. Once again we are receiving the immense contribution to the pooling of resources represented by Lend-Lease from the United States, not only of finished munitions, but also of food and raw materials. Similarly the Canadian Government have during the last two financial years made a most munificent contribution to our needs, first by the billion dollar gift to us and last year by a corresponding gift to the United Nations; and it gives me deep pleasure to inform the Committee that I have learned that the Canadian Government will again make a contribution to the war effort of the United Nations this year on similar lines.

For our part, we give mutual aid to the United States and Russia and our

other Allies on a very large scale and in proportion to our resources. On this it may be remembered that we have a population of about one-third of that of the United States and a national income of not much more than one-fifth. This story is told in the Report on Mutual Aid published last November as Command Paper 6483.

There is another side to the story—the drain upon our resources of the external costs of the war. We have to meet vast and growing cash expenditure in other countries for military operations and supplies. To finance our purchases in the United States before Lend-Lease, and to meet these external costs, we have already parted with overseas assets to the extent of £1,000,000,000, and we have incurred undischarged overseas liabilities amounting to £2,000,000,000. We are not yet at the end of this tale. We have parted with all this, not to neutrals, but nearly all of it, some 90 'per cent., to our Allies and associates, most of whom will emerge from this war with their overseas financial position greatly strengthened as a result, just as ours is greatly weakened. I make no complaint of this, for we are in this war with all we have got, but no one must suppose that a country can wage a war on this basis for several years and emerge at the end without a price to pay. We have not yet paid that price.

I sometimes detect indications of a temper in the country and in the House in the attitude to the future which does not pay due regard to these sombre facts. I must, therefore, explain our problem to the Committee.

POST-WAR EXTERNAL FINANCIAL POSITION

This second world war will complete a revolutionary change in our financial position. Before 1914 the United Kingdom was the world's leading creditor country. Year by year, we received from other countries interest and dividends on the investments which British citizens have made abroad for many previous generations. These annual receipts amounted to a very large sum, and they would have sufficed, had we chosen so to use them, to defray a large proportion of our import bill for food and raw materials and other commodities that we imported from overseas. In fact, we did not need to use much of this external income for


that purpose. Our exports, visible and invisible, were large enough in those days to cover most of our imports, and we used most of our income from overseas investments for the purpose of making fresh investments. In the first world war these great investments of the past proved their value to us as a nation. By mobilising and selling only part of them, we were able to finance, not only our own war needs, but those of our Allies in the period before the United States entered the war. As a result, however, our receipts from overseas investments were so much less.

What was more important, that war dealt a heavy blow to our export trade, and we were never subsequently able to restore our exports to the volume they had reached before 1914. That loss of export trade entailed tragic consequences, for it was the main cause of the long-continued unemployment during the inter-war period in our depressed areas. But though our exports and the income from overseas investments were reduced, there was still enough, when added together, to enable us to pay for what we bought. The wide favourable margin on the balance of payments which was used in the past to make fresh loans abroad, had, however, disappeared. In some years we had a favourable balance of moderate dimensions. In other years we had an adverse one. By and large, our position was this: our international income had been reduced and we were living right up to it, not beyond it, but up to it, for the first time in our modern industrial history. That was the change produced by the first world war.

This world war is making further deep inroads into our net international income from investments. I speak of net international income, for we have to consider the effects, not only of the sale of our overseas securities, but, as I have already indicated, of the external debt we have incurred for the prosecution of the war. The broad fact is already sufficiently clear, that when the war is over, we shall have ceased to be a large-scale creditor country. We shall no longer be able to rely, as hitherto, on being able to finance any material part of our import needs from overseas investment income.

POST-WAR EXPORT TRADE

Now this fact must be taken in conjunction with the other fact I have just emphasised, that we were already living

up to our international income when we entered the present war. We cannot afford this time to accept a further loss of export trade, and continue to import as much as before. On the contmary, if we are to avoid a drastic curtailment in our volume of imports, such as might threaten our standard of life and gravely prejudice our prospects of active employment, it will be indispensable for us to increase our exports, and recapture some of the trade which we lost in the inter-war years. That will be a matter of life and death to us, for it is impossible for any country to live indefinitely beyond its international income.

Let me make one point plain at this stage. The Government cannot make an export trade. That depends on the manufacturers, merchants and workpeople of this country. What the Government can do is to try to make conditions in which export trade can flourish, both by their foreign policy of co-operation in the international field, by an appropriate internal policy in managing and disposing of physical resources, material and labour, and by their financial policy.

In that connection let me say a word on another aspect of our external financial problem. It is vital to maintain confidence in the value of sterling. I spoke a moment ago of the debts we are incurring to many other countries in order to finance our war purchases. A large part of that debt takes the form of what are called "sterling balances," which are very much like deposit accounts which other countries are content to hold in London. It is a very convenient form of war-time borrowing, and it has been rendered possible by the confidence which sterling enjoys as a reliable international currency. It would add greatly to oar difficulties if anything were to happen to disturb that confidence and cause countries to prefer some other asset to a sterling balance. In practice, I have no doubt that confidence in sterling will be maintained as a consequence both of our performance in the war and of the steadiness of our policy both to-day and in the post-war years.

Mr. MacLaren: Mr. MacLaren (Burslem): That is confidence in the people.

POST-WAR TAXATION

The general account which I have given of the background of our finances makes it plain that our financial problems will not suddenly disappear at the end of the war and certainly not at the end of hostilities in Europe. So long as the war with Japan continues, the end of hostilities in Europe will make a much smaller difference to our war expenditure than might be supposed. We shall still require a great effort to beat Japan promptly over the vast area of the Eastern war. At the same time we shall be faced with demands for expenditure on some of those programmes of social and economic development upon which we are now working. The Committee therefore will not expect the Chancellor of the Exchequer, on the morrow of an armistice, to come down to this House and celebrate the occasion with proposals for the immediate reduction of taxation. Nor should we build up exaggerated hopes of an early lightening of our war-time tax burden. By pre-war standards, the general burden of taxation will have to remain high for some considerable time to come.

Nor will the demands of the post-war period end with high taxation. We are


not likely, indeed, to be able to meet our expenditure entirely out of revenue at first. We shall have to borrow. If we are to maintain the soundness of our present financial policy and to achieve borrowing without inflationary loss of values, saving will, also, have to continue on a high level. The need for saving will be reinforced by a shortage of consumption goods until industry has changed over from war to peace conditions. Unless we consistently follow a policy which will keep purchasing power within reasonable bounds, we shall face a runaway rise in prices, a feverish boom and then disillusion and bitterness. It would be no good to rely solely on Government controls to prevent that happening. Controls must start with self-control. If self-control is weakened, Government controls will be fighting a long battle against every form of selfishness in every section of the community.

But though we cannot expect, as individuals, an immediate easing of the burden of taxation when hostilities cease, there are vital preparations for reconstruction which we can make in the field of taxation, as in other fields. We must prepare such measures as we can devise to give industrial enterprise a fair chance to meet the challenge which the future holds for all of us. Industry is entitled to know where it stands, and there is, in my judgment, a very definite contribution which taxation policy can, and should, make to the problems of reconstruction.

POST-WAR INCOME TAX ON INDUSTRY

That brings me to what is, in some respects, the most important part of what I have to say, for it concerns the methods of measuring the profits of industry on which Income Tax in the post-war period will fall. The Committee may remember that a fresh study of the position of industry in relation to the incidence of Income Tax on profits was initiated by my predecessor a year ago, when he announced that he had asked the Board of Inland Revenue to examine the subject, with particular reference to profits which are not distributed but are ploughed back into the business for further development, and the treatment of capital expenditure for which no allowance is made in the existing Income Tax code. Evidence has been received since that time in the

course of a very full inquiry, from organisations representing industry, including agriculture, and the whole subject has been anxiously examined by my advisers and by myself since I took my present office some six months ago. As a result, I am now able to give the Committee some important declarations of Government policy.

I must emphasise that I am addressing myself to Income Tax in the post-war period, and the proposals which I make will not come into effect until the return to peace-time production sets in. I think the Committee will agree that I should indicate my intentions now in outline, if not in full detail, in order that industry may make their plans for reconstruction in the light of that knowledge. There are many details to be filled in before we can see the translation of our policy into statutory form, and my advisers are now engaged on this task. My intention is to propose legislation on the subject in good time, so as to enable us to bring the new arrangements into force speedily on the termination of hostilities.

Two main propositions have been advanced by industry. The first is one to which I do not feel able to accede. It is that there should be a reduction of Income Tax in respect of any industrial profits that are not distributed but are placed to reserve for the future development and extension of the business. This, in effect, would be giving relief for the act of saving, and that is not, in my judgment, the appropriate approach to this problem. The other proposition advanced by industry is that taxable profits should be real profits in the sense that those profits should be struck only after making all proper deductions and allowances, especially adequate allowances such as might be made on a commercial basis for the amortisation of money expended on assets which are used up in the making of profits.

This proposition is not new. It has been frequently urged in the past and frequently considered, but the issue has undoubtedly become more pressing nowadays, when the standard rate of Income Tax has risen to such high levels. Tax should be charged on true profits reasonably measured, but not more. The appropriate allowances for capital expenditure are of supreme importance in relation to the work of reconstruction at


the end of the war when, in order to take up the challenge which I have mentioned, in the interests of employment policy, industry of all kinds may have to embark upon modernisation and re-equipment. It is, therefore, to these questions, that I now address myself.

INDUSTRIAL RE-EQUIPMENT: PLANT AND MACHINERY

The main class of expenditure in modernisation and re-equipment will be on plant and machinery. Under the existing law, as hon. Members know, the cost of plant and machinery is normally written off throughout its life by an annual wear-and-tear allowance and by an obsolescence allowance, which is given when the plant and machinery are replaced, to cover any part of the original cost, less the scrap value, which has not been written off by the annual wear-and-tear allowance. I propose that there should be given, apart from these allowances, a special initial allowance of 20 per cent. of the cost of new plant and machinery. An allowance of this kind, which will allow one-fifth of the actual expenditure on plant and machinery in any year to be written off forthwith against the profits of that year, as they come under charge for taxation, will represent very substantial financial assistance to industry in carrying out its post-war re-equipment. The change will mean, of course, that there will normally be a smaller obsolescence allowance to be given in those cases in which the plant has not been fully written off during its life, and, to that extent, it will diminish the force of the complaint made by industry for many years that no obsolescence allowance is at present given where plant and machinery are not replaced.

I am, however, ready to meet that grievance so far as it still remains. I propose as part of the post-war policy that in the case of a continuing business the obsolescence allowance shall be given when plant and machinery are scraped whether the particular piece of plant or machinery is replaced or not. It may happen, on the other hand, that a trader may sell plant and machinery at a price in excess of the written-down value, and I must obviously attach to my proposal with regard to obsolescence a provision to recover the excess allowance in such cases.

NEW INDUSTRIAL BUILDINGS

The other main industrial assets of importance in modernisation and re-equipment are industrial buildings. Allowance is made under the existing law in respect of the cost of repairs and maintenance of buildings, but apart from the special wartime provisions for exceptional depreciation of buildings provided since the beginning of 1937, the present law makes no allowance in respect of the depreciation of buildings except for the special allowance given for mills and factories. Again, I look at the main purpose, which is the modernisation and re-equipment of productive industry, and therefore to the buildings employed in productive industry. I think, therefore, both on practical grounds and on grounds of cost, that the existing differentiation between such buildings as factories on the one hand, and other trading premises such as shops and offices on the other hand, must be maintained. In the case of buildings such as factories—and I include in that term buildings associated therewith, say for the welfare of the staff or the storage of raw materials or goods produced —I propose that the cost of the building should be written off on the basis of a 50 years' life, by an annual depreciation allowance of 2 per cent. of the cost, and that as an immediate instalment of that allowance there should be an initial allowance, not of 20 per cent., but of 10 per cent., of the actual expenditure. The new depreciation allowance of 2 per cent., though not of course the initial allowance of 10 per cent., will apply to existing factories as well as new ones, in so far as the cost has not been written off under existing war-time conditions, and in so far as the life already run is less than 5o years. It will thus replace the existing mills and factories allowance.

My main proposal for the reconstruction period will thus consist in the deduction from taxable profits of 20 per cent. allowance on all expenditure on new plant and machinery, and 10 per cent. allowance on all expenditure on new industrial buildings. The allowance in respect of plant and machinery will cover all businesses, and will be of particular value to shipping, where it will materially assist the policy of keeping our incomparable Mercantile Marine thoroughly up to date, while incidentally, I hope, providing a steady flow of scrap to the steel industry.

TAXATION OF AGRICULTURE

In the case of agriculture, the farmer commonly does not, while the ordinary industrialist generally does, provide the whole of the capital required for the business; for in the case of the tenant farmer, part of the capital is provided by the landowner in the form of farm buildings, farm cottages and so on. It occasionally happens in ordinary industry that new factories are built and let to traders, in which case they will rank for relief to the landlord, in the same way as if they were built by the trader. In agriculture, it is the rule rather than the exception for the landlord to provide the buildings. There is a co-partnership between the owner and the farmer, and expenditure on the developmwt of the agricultural industry is borne by the two partners. So far as the farmer bears the expenditure, he will get precisely the same relief as the ordinary industrialist. So far as the landowner does so, he will qualify for similar relief against not only the income drawn from the land, but against any other income liable to tax.

AGRICULTURAL CREDITS

While speaking about capital expenditure in the farming industry, I should like to refer to a further measure of assistance which the Government will shortly be proposing to Parliament. My right hon. Friends the Minister of Agriculture and the Secretary of State for Scotland and I are agreed that it is desirable that ample loan facilities for long-term loans at reasonable rates should be available to agriculturists to enable them, among other things, to repair and improve farm buildings, and to carry out other capital works. For this purpose we shall shortly introduce a proposal that the Government should grant further appreciable financial assistance to the Agricultural Mortgage Corporation and the Scottish Agricultural Securities Corporation, in order that they may make a substantial reduction in their lending rates of interest.

INCOME TAX RELIEF FOR OTHER CAPITAL EXPENDITURE

In addition to my proposals for taxation relief for new expenditure on buildings, plant and machinery, it is proposed, in the measurement of profits, to provide allowances in respect of the cost of certain other kinds of industrial assets which

are used up in the earning of profits. I take, first, the case of patent rights. Where a patent is acquired on the basis of the payment of a royalty, the royalty is income subject to deduction of tax, and the trader paying the royalty enjoys, in fact, full allowance in respect of the cost of the patent. But where the royalty is acquired by payment of a lump sum the lump sum is not treated as the income of the recipient, nor is any allowance made under the existing law to the trader in respect of the lump sum, though that expenditure is used up in earning profits over the life of the patent. When this subject has been examined in the past, as for instance by the Royal Commission on Income Tax, the two questions of charging the lump sum to Income Tax in the recipient's hands and writing off the expenditure in the buyer's accounts have naturally been linked together. I propose, as far as patent rights after the war are concerned, to maintain this link by providing for the writing off, during the life of the patent, of any lump sum paid by a trader in acquiring the patent, while making the sum payable for the patent rank as income in the hands of the seller, with suitable provision enabling him to spread that income over a number of years to avoid any hardship that might arise if it were taxed as the income of the year in which it is paid.

A similar issue arises in the case of leaseholds where the lease is granted on the payment of a premium in addition to a lease rent. The position of leaseholds is much more complicated, and while I should like to propose outright the application of a similar principle to that which I have outlined for patent rights, I must say no more than that this subject also will be further considered.

I propose also to introduce a depreciation allowance in the extractive industries, that is, in mines, oil wells, quarries and the like, where capital expenditure is incurred on various types of assets which are limited in life by the life of the mineral or oil deposits. New expenditure in respect of sinking shafts and the provision of surface facilities will qualify for an additional allowance on the same principle as new buildings, plant and machinery, and the balance of expenditure will be written off against subsequent profits.

SCIENTIFIC RESEARCH

The general outline I have just given did not touch upon one subject which, in its more general aspect, was fully debated in the House last week. I refer to scientific research, particularly to the consistent application of research to methods of production. The taxation aspect of this matter was mentioned in the course of last week's Debate. I am glad that this occasion makes it possible for me to take up that question and, I trust, to make some contribution to the examination of a subject which has always been of the greatest personal interest to me. As my right hon. Friend the Lord President said last week, we ought not to depreciate our own efforts in the field of research. When the time comes, there will indeed be a remarkable story to tell of industrial and applied scientific developments in this war. In the application of research to the problems set to the scientists, we have shown ourselves at least equal to any other belligerent. Industry has responded to the compelling urgency of war, and a magnificent team of research workers has met that urgency.

Research has three aspects. There is the fundamental research of the scientists, whether at the university, or in the laboratories attached to industrial establishments or industrial organisations. Successful research is not a mass product. It does not flow merely from numbers of research workers. It requires an imaginative quality of the mind. Without fundamental research there can be no hope of steady progress, and still less of those strange leaps of the creative intelligence which produce in peace no less than in war some of the most important discoveries. But to industry research has a limited value if it stops at the laboratory. There are two further stages. There is what I might describe as the pilot plant stage, where laboratory results are tried out experimentally on a larger scale. Every industrialist knows that it is a real difficulty to translate the delicate skill of the scientific researcher, and the artificial conditions in which he may have worked, into terms of large-scale production. I believe that in this country we have been, perhaps, slow in developing this essential stage. The next and final stage is the commercial production of the product.

These are the three integral parts of the same creative process. To fail on

any one is to fail over the whole. Therefore, in considering the help which taxation policy can give to research, my aim has been to help the whole process. It is, I think, most desirable that industry should know in advance the faxation treatment which will be accorded to research expenditure which is undertaken when hostilities' cease. I propose, therefore, to include provisions on this matter in the forthcoming Finance Bill.

INCOME TAX AND RESEARCH EXPENDITURE

For taxation purposes research expenditure is divided between that incurred by a central body on behalf of a section of industry and that carried out by a trading concern in its own works. It has been the practice of the Inland Revenue, since the last war, to allow as a deduction, in computing profits, all annual payments made by a trading concern to a central research body approved by the Department of Scientific and Industrial Research, though this allowance did not extend to a particular payment earmarked for a special capital project. As regards a trader's own research, the general principle has been to distinguish between expenditure of a revenue character and capital expenditure, allowing the former and disallowing the latter, though in practice there has been no undue insistence on this distinction.

In my view, and I think the Committee will agree, expenditure on research stands on a different footing from the other expenditure of a trader. It is not immediately related to the making of profits, as in the case of expenditure incurred in the manufacture and sale of goods, nor do the benefits accrue mainly to the originator. I think therefore that there 's a case for modifying in favour of research expenditure the distinction which the Income Tax Acts draw, and must indeed draw, between capital and revenue expenditure.

My proposal is that any research expenditure of a capital character, which means normally expenditure on laboratory buildings, plant and machinery, should be allowed over a period of five years, or over the life of the assets if shorter, as a deduction from profits for Income Tax purposes. In addition, all current research expenditure such as salaries, wages, cost of materials, repairs, and so forth, will be


allowed as and when incurred by the trader.

This allowance of capital expenditure over a period of five years will be the rule for research carried out by a trading concern on its own account. In addition I propose that any payment, whether for a capital purpose or not, made by a trader to a central research body approved by the Department of Scientific and Industrial Research shall be allowed, as and when made, as a deduction in computing the profits of the concern. Contributions to research being carried out by a university or college on matters of concern to the trader's business will similarly be allowed.

I hope that the Committee will agree that in this comprehensive attempt to relieve from taxation altogether funds devoted by industry to the support of fundamental research, to the translation of laboratory research to production, and to the full-scale development of the product, the Board of Inland Revenue have tackled the problem with a sense of realities born out of their close interest in the effects of taxation upon industrial recovery and the buoyancy of the revenue.

I believe that in what I propose, I am meeting all the reasonable claims of industry for adapting taxation policy to the development of industrial research. There is too much evidence that before the war we were falling behind other important industrial countries in the range, although not necessarily in the quality, of our industrial research and its application. As I have said the war has demonstrated to the world that the quality is there, and the war gave financial opportunities of an extended range. I am trying to carry forward, within practical limits, to the solution of our urgent peace-time problems of production, significant financial help. I have no doubt that industry will respond over a wide field. The ideal towards which we ought to move is a general practice by which each manufacturer devotes a contribution, measured by his own turnover, to the furtherance of scientific knowledge. I hope also that there will be a much wider pooling of ideas and technique in the development of research, even down to the production of what I have heard described as that mysterious catalyst the "know-how." In many fields we have a lot of leeway to make up, and co-operation is economical

of time, money and skilled personnel, all of which will be in short supply, and in some cases very short supply, after the war. Further, I think that the industrial research worker should be encouraged to regard himself not only as serving the organisation which pays him, but as contributing to the sum of available knowledge, and enlarging the horizons of the material world. We must provide our research workers not only with the physical apparatus which supplies their needs, but with the motive which evokes their latent powers.

OIL DUTIES

There is one other matter which I can conveniently mention at this point. When reviewing the steps which I might take to ensure that, consistently with Revenue needs, methods and scope of taxation are not inimical to the growth of industry after the war, I turned my attention to the chemical industry, so far as it is based on products derived from oil or coal. Here there is a vast field to be opened up, of which plastics are one, but only one, example. I regard it as of the first importance that this country should play a large part in these new developments. In the main, the existing Customs Duties on imported oil have been framed primarily with a view to raising substantial revenue from the use of oil as fuel, whether in internal combustion engines or otherwise. It should be possible, without unduly sacrificing revenue, to make sure that the tariff offers no obstacle to the chemical industry in obtaining the necessary raw materials from oil. I am not, however, in a position to lay specific proposals to this end before Parliament, for the reason that, although the main objective is clear, there are various aspects needing close expert scrutiny before the exact form of legislation to be introduced can be determined. In particular, investigation is needed of the inter-relationship of raw materials derived from oil and from coal respectively. My right hon. and gallant Friend the Minister of Fuel and Power and I, accordingly, intend shortly to arrange for an inquiry to be set on foot, in order that we may be supplied with the necessary data on which specific proposals can be based. I have reminded the Committee that we are still at war, and that the needs of the war must be our chief immediate preoccupation. But I have also said that I have felt entitled to look forward. In my


remarks about our internal financial policy and our external financial position, I have indicated the problems. I hope, and believe, that, in the account I have given of my policy with regard to the incidence of taxation upon industry, I have drawn in firm outline a not unimportant contribution to industrial recovery after the war and to the policy of full employment, to which the Government and the community have pledged themselves.

PROSPECTS FOR 1944–45: EXPENDITURE

In conclusion, I must turn back to our Budgetary prospects for the present financial year, and I will keep the Committee for only a few minutes longer. In some respects, my task of estimating the needs for which the Budget must provide is probably more difficult than at any time during the war. So far as the National Debt is concerned, the interest on our growing debt will probably require some £55,000,000 more than the cost last year, and I propose to provide for a debt charge of £420,000,000. As in previous years, power will be sought to borrow any additional sum necessary to cover the contractual Sinking Funds. Other Consolidated Fund services are put at the same figure as last year's expenditure of £16,000,000. Ordinary Civil Votes, at £501,000,000, will require some £37,000,000 over the Budget estimate of 1943–44, owing to increases on supplementary pensions, school meals, roads, an expected deficit on the Post Office, and other items.

When we come to the Vote of Credit expenditure, the prospect is obviously full of uncertainties. If the war in Europe were to continue throughout the financial year, Vote of Credit expenditure might be anything between £5,000,000,000 and £5,200,000,000. But if I am to make any reasoned estimate of the probable soundness of our financial programme, on the lines followed in recent Budgets, I must recognise that there are possibilities of a change in the course of the war before the end of March, 1945. It would be idle to attempt to evaluate the bearing of such possibilities on the Budget. Indeed, to do so would hardly be consonant with the Government's determination to press on with the war effort and to take nothing for granted until victory is achieved. But, for the purposes of this particular Budget, I think I would

be justified in assuming a very round sum for our Vote of Credit expenditure. I propose to put it at the figure of £5,000,000,000, compared with £4,900,000,000 estimated last year and an actual expenditure of £4,950,000,000. On that basis, the total expenditure to be provided for in 1944–45 will be £5,937,000,000.

REVENUE

Towards that total, the various Inland Revenue duties are expected to provide £122,000,000 more than in 1943–44, and to rise, for the first time, to the notable total of £2,000,000,000. The increase is practically all attributable to the Income Tax, which is put at £1,300,000,000, an increase of £116,000,000 over the yield last year. The yield of Excess Profits Tax, after taking into account the effect of the changes which I have proposed with regard to standards, is estimated at £500,000,000, practically the same as the amount actually received from this source of revenue last year. The other Inland Revenue duties I put at approximately the same figures as last year.

As regards Customs and Excise, the supply of many dutiable articles continues to be controlled and restricted. This sets limits to the yields of the duties on these articles. I shall, however, be receiving a full year's yield from the Budget increases of 1943. But this year will see the departure overseas of large numbers of those who consume the principal dutiable commodities. When our Expeditionary Forces go overseas, the beer and spirits they drink, the tobacco they smoke, and the oil they use will become free of duty. Accordingly, it is necessary to discount the Customs and Excise estimates by making some allowance for this migration of consuming power. I would, however, warn anyone against wasting his time. That is what he would do if he attempted to deduce from these figures any estimate of the numbers likely to leave our shores. I have mentioned the matter only to explain why I am putting Customs and Excise estimates for 1944–45 at a lower figure than the actual receipts for 1943–44. The total estimate, taking into account all these factors and the minor adjustments which I mentioned earlier, is £1,038,000,000, which is £5,000,000 less than I received last year.

All other items of revenue, none of which calls for special comment, are ex-


pected to yield £64,000,000, roughly the same as last year. The total revenue for the year will thus be £3,102,000,000, leaving an excess of expenditure over revenue of £2,835,000,000. The excess will have to be covered by borrowing. In accordance with recent custom, I shall ask the House to give a speedy passage to the National Loans Bill, which will give us the borrowing powers needed for 1944–45 and which will be in the same form as in recent years.

SOURCES OF FINANCE

How far may we expect to finance our expenditure in 1944–45 from the sources of borrowing to which I referred in my review of the past year? Any estimate of overseas disinvestment must be very precarious, and I propose to put it at practically the same figure as for the calendar year 1943, namely, £650,000,000. That means that the amount of expenditure requiring finance at home will be £5,287,000,000. Of that figure revenue will cover £3,102,000,000. I expect about £300,000,000 to be available from extra-Budgetary funds, local authority surpluses, and war damage, and war risk payments in the hands of the public. As regards impersonal savings, the excess of tax liabilities over payments will probably show a further fall and I am assuming that gross impersonal savings will probably amount to about £225,000,000. It is very difficult to estimate what the total of personal savings is likely to be, but I will assume that it can be put at the perhaps conservative figure of £1,550,000,000. On that basis, the residue required for domestic finance would amount to £110,000,000. For technical reasons, explained in the National Income White Paper; the estimates of the residue in 1942 and 1943 have now been reduced below those previously given, but the figure of £110,000,000 which I have just quoted for 1944 is a very moderate and satisfactory figure, by comparison with the revised totals for recent years.

CONCLUSION

On the basis of these revised estimates, I can now give the Committee the three salient features of the outlook for this financial year. First, the prospective deficit, although slightly larger than the actual deficit last year, is practically the

same as that which my predecessor thought it right to accept in his Budget a year ago. Second, the revenue from taxation will amount to 52 per cent. of our total expenditure, a higher proportion than in any previous year during this or the last war. It will represent no less than 58 per cent. of the expenditure requiring what I have called domestic finance—a slightly higher percentage than in the year just ended. Thirdly, it appears that it will be within our capacity to finance the prospective deficit from savings and other sources of a non-inflationary character.

In all the circumstances, I have decided that, apart from the quite minor changes already mentioned, it is not necessary for me to propose any additional taxation on this occasion. Therefore, to return to my metaphor of physician and patient, the prescription is "The mixture as before."

I. BEER (EXCISE)

Resolved:
That, as from the twenty-sixth day of April, nineteen hundred and forty-four, the rates of the duty of excise charged in respect of beer under Section one of the Finance (No. 2) Act, 1939, shall be increased by adding—

(a) two shillings and threepence to the sums of six pounds eighteen shillings and four-pence halfpenny specified in Part I of the First Schedule to the Finance Act, 1943; and
(b) one penny to the sum of five shillings and three halfpence so specified;
and, in the case of beer in respect of which it is shown to the satisfaction of the Commissioners of Customs and Excise that duty at the rates increased as aforesaid has been paid, the excise drawback allowed under the said section one shall be allowed at rates increased by adding—

(i) two shillings and threepence to the sums of six pounds eighteen shillings and sixpence halfpenny specified in Part II of the said First Schedule; and
(ii) one penny to the sum of five shillings and three halfpence so specified.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

2. BEER (CUSTOMS)

Resolved:
That as from the twenty-sixth day of April, nineteen hundred and forty-four, the rates of the duty of customs charged in respect of beer under Section one of the Finance (No. 2) Act, 1939, shall be increased by adding—

(a) two shillings and threepence to the sums of six pounds eighteen shillings and


ninepence halfpenny specified in Part III of the First Schedule to the Finance Act, 1943, and the sums of seven pounds eighteen shillings and ninepence halfpenny specified in Part IV of that Schedule; and
(b) one penny to the sums of five shillings and three halfpence specified in those Parts of that Schedule;
and, in the case of beer in respect of which it is shown to the satisfaction of the Commissioners of Customs and Excise that duty at the rates increased as aforesaid has been paid the customs drawback allowed under the said Section one shall be allowed at rates increased by adding—

(i) two shillings and threepence to the sums of six pounds eighteen shillings and sixpence halfpenny specified in Part V of the said First Schedule and the sums of seven pounds eighteen shillings and sixpence halfpenny specified in Part VI of that Schedule; and
(ii) one penny to the sums of five shillings and three halfpence specified in those Parts of that Schedule.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

3. PURCHASE TAX

Resolved:
That the extent and incidence of purchase tax be varied so as to give effect, as from such date as may be provided by any Act of the present Session relating to finance, to provisions for charging the tax on certain importations of chargeable goods and varying the transactions that are to be treated as chargeable purchases for the purposes of the tax, increasing the scope of registration, excepting persons from the effect of registration in certain cases, and requiring in certain circumstances security for payment of the tax.

4. INCOME TAX: CHARGE OF TAX

Resolved:
That,—

(a) income tax for the year 1944–15 shall be charged at the standard rate of ten shillings in the pound, and, in the case of an individual whose total income exceeds one thousand five hundred pounds at such higher rates in respect of the excess over one thousand five hundred pounds as Parliament may hereafter determine;
(b) subject to the provisions of the Income Tax (Employments) Act, 1943, and the Income Tax (Offices and Employments) Act, 1944, all such enactments as had effect with respect to the income tax charged for the year 1943–44, other than such enactments as by their terms relate only to tax for that year shall have effect with respect to the income tax charged for the year 1944–45.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

5. HIGHER RATES OF INCOME TAX FOR 1943–44

Resolved:
That income tax for the year 1943–44 shall be charged at rates exceeding the standard rate in the case of individuals whose total incomes exceed two thousand pounds, and those rates shall be rates in the pound which respectively exceed the standard rate for that year by the amounts specified in the second column of the Table in sub-secution (I) of section seven of the Finance (No. 2) Act, 1940.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory affect under the provisions of the Provisional Collection of Taxes Act, 1913.

6. RELIEFS OF PERSONS RESIDENT ABROAD

Resolved:
That, for the purposes of the proviso to sub-section (1) of section twenty-four of the Finance Act, 1920, the relief provided for by section twenty-seven of that Act shall be left out of account in computing—

(a) the amount of the income tax payable by an individual; and
(b) the amount which would be payable by him by way of income tax if the tax were chargeable on his total income from all sources including income which is not subject to income tax charged in the United Kingdom.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

7. LUMP SUM PAYMENTS FOR COPYRIGHTS

Resolved:
That the author of a literary, musical, dramatic or artistic work who has been engaged on the making thereof for a period of more than twelve months shall be entitled to require that part of any lump sum payment that he receives for the whole or any part of the copyright in that work shall be treated as having become receivable in an earlier year or earlier years.

8. EXCESS PROFITS TAX

Resolved:
That the extent and incidence of excess profits tax (for past and future chargeable accounting periods) shall be varied so as to give effect to amendments of Section thirty-five of the Finance Act, 1941 (which relates to the avoidance of tax).

9. TRADING WITH THE ENEMY

Resolved:
That retrospective provision shall be made as respects income tax and death duties where persons, income or property are or is affected by the law relating to trading with the enemy.

10. ESTATE DUTY

Resolved:
That such of the enactments relating to estate duty as provide for charging duty in respect of the assets of a company to which property has been transferred by a person, or at his request or with his consent or acquiescence, shall, in the case of such a person dying after the commencement of any Act of the present Session relating to finance, be amended as respects—

(a) the computation of the extent to which the assets of the company are to be deemed to pass on his death;
(b) the determination of the net income of of the company;
(c) the prevention of duplication of the charge of duty; and
(d) the rate of interest that is to be applied in making certain computations.—[Sir John Anderson.]

II. AMENDMENT OF LAW

Motion made, and Question proposed,
That it is expedient to amend the law relating to the national debt and the public revenue, and to make further provision in connection with finance."—[Sir John Anderson.]

Mr. Arthur Greenwood: After your very arduous duty, Major Milner, I rise just for a few moments. First, having listened to Budget speeches for over 20 years, may I congratulate my right hon. Friend on the lucidity of his statement? It is no easy task to deliver a Budget speech. I would also congratulate him on the brevity of the speech, having regard to previous Budget speeches to which I have had to listen. I think my right hon. Friend has not only been listened to with interest, but, at the end of his speech, the whole Committee gave a great sigh of relief to know that no further burdens were going to be placed on the very hard-driven British public.

Mr. George Griffiths: They have not got any more.

Mr. Greenwood: I think it is, in that way, a unique Budget Statement. I remember, in over 20 years, no Budget Statement which has made so wide a sweep of our national affairs as my right hon. Friend has done to-day. I agree with what he said about our national income. It is perfectly clear that a Budget is an impossible thing to conceive and to draft apart from the nation's production at the time, and I am very glad that my right hon. Friend emphasised that side of the problem. It is an inter-

esting Budget from another point of view, that, though he has given us nothing, though he has imposed nothing, he has dangled a sort of prospective carrot before the nose of industry in this country.
He would be a very bold man who, without reflection, attempted to make a serious and considered speech after listening to the Chancellor of the Exchequer, and I shall, therefore, confine myself, as is customary on these occasions, to a few general remarks. I think my right hon. Friend has proved to us that, notwithstanding the strains and stresses of the war, Britain's financial stability remains unaltered. It is a great tribute, not merely to successive Chancellors of the Exchequer, but to the quality of our people, whose deep interest in the cause we are all serving now leads them to take whatever harsh taxation may fall upon them. It is, I think, a good thing that we have raised, or shall, in this coming year, raise, a bigger proportion of our income from taxation than in any previous year during the war. We have, I think it is right to say, carried the burden of taxation due to the total cost of the war in this country far more bravely than any other of the belligerents. That is to our credit, and reflecting upon what my right hon. Friend might be concealing in his mind, I reflect myself that I see no reason for greatly increased taxation if real savings can be maintained, and one would have thought that, in this time of rationing and scarcity, and when, if ever in our history, we should forgo luxuries, it ought to be possible in the coming year to maintain our rate of savings, and, as my right hon. Friend has now introduced a system of "Pay as you earn," I should hope that in the coming year the people of this country will lend us their savings.
My right hon. Friend insisted, quite rightly, on what to me is the capital fact in our present financial situation—our capacity for production. I have said this on more than one occasion in this House, and I have been scolded for a certain sentence which I used—scolded in the highest quarters. I make no apology for my statement. I still maintain that, in this sort of situation, pounds, shillings and pence have become—I did not say they were—meaningless symbols, and my right hon. Friend, I am glad to think, has


sustained me in my statement by the emphasis he has placed upon production during the war.

Mr. G. Griffiths: They missed that point all the time.

Mr. Greenwood: When the war is over, and we have new strains and stresses to face, nobody in this country, after the undertakings that have been given in the name of this Parliament and people, is going to come to the House and say that the only way to fulfil our social undertakings is by a measure of financial economy. You are never going to clothe the people of this country by cutting their cloth. You can only clothe the people of this country and satisfy their needs by increasing the value of their resources by the use of their labour. That seems to be unexceptionable and indeed, very orthodox economy. I shall be surprised if anybody dissents from that, and I repeat again, that I feel indebted to the right hon. Gentleman for coming to my assistance in this argument. We really cannot live on the scale of expenditure that this country must face in the years immediately after the struggle on our present production income. It is impossible. Therefore, we have to look forward, and I am glad that the right hon. Gentleman has stressed that point. Indeed the case for his industrial reliefs is not, as I understand it, that he wants to relieve the profit-makers. I might argue about that if I chose to do so. His case is that he wants to render British industry far more efficient. With that I think all of us can readily agree.
My right hon. Friend pointed out the danger we might be in of inflation. There is always cast upon the shoulders of the Chancellor in war-time the responsibility of delivering a homily about inflation. In my view we are a long way from inflation at the present time, but we must bow to the homily that my right hon. Friend has delivered to us. If we can maintain our rate of real saving, and can continue to restrict consumption within reasonable limits, there is not need for inflation, On the other hand, there might be new charges and new claims to be met, which it would be difficult to resist, and my right hon. Friend and many hon. Friends around me thought that the Chancellor attached a little too much importance to the wages issue as affected by the increase of costs

and not perhaps sufficient importance to the other charges which are outside the purview of the working people to whose wages my right hon. Friend has referred.
I do not intend to take up the time of the Committee longer, except to say one final word. Nothing that the Chancellor asks of this House for the prosecution of the war will be denied him, in any quarter of the House, certainly not by hon. Friends behind me. By that we stand. We do not mind a little castigation about the fear of inflation, but our will and our hearts are as good as they were at the beginning of the war, and all the financial resources that my right hon. Friend desires, will, as far as we are concerned, be poured out before him.

Sir Percy Harris: May I be allowed the great privilege of adding my felicitations to those already offered to the Chancellor of the Exchequer on having so successfully passed through the great ordeal of presenting a Budget for the first time? These felicitations. I can assure him, come from my heart. I have a very genuine appreciation of his personality and his courage. He is such a modest man that do not mind expressing my feelings. He has had a remarkable career. He has not gone from log cabin to White House, but he has gone from the position of a humble civil servant to the greatest post, almost, in the land, that of Chancellor of the Exchequer. He has filled a number of posts of such a varied character that it is hardly possible to enumerate them. He was once Under Secretary in Ireland; he has been the head of the Inland Revenue; he has seen the other side, as servant, and now he comes as master. He has been Governor of an important Province of India, and in this House he has been Home Secretary, Lord President of the Council, and has held I do not know what other posts. Now he has had the great opportunity of his life-time to present the Budget.
I can go back even further than my right hon. Friend the Member for Wakefield (Mr. Greenwood). I go back to the time of the last war. I remember the masterly statements of Mr. Reginald McKenna, Mr. Sonar Law, the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), and, during more recent dates, of the various Chancel-


lors. The characteristic of this particular Budget is the unexampled courage that the Chancellor has shown in coming down to the House and doing the exceptional thing of asking the country for no new taxation, except for a nominal penny on beer. That wants some courage. I do not believe that there is a precedent, as far as I can recall, for any Chancellor presenting the same Budget as that of the year before. But there is optimism behind it. There is an optimism that will have healthy reactions on the country. The right hon. Gentleman represents the confidence in his mind of certain victory. He shows that he is satisfied that the nation now is so secure that he can rely on the revenue meeting the remarkable figures of the previous year.
We have some reason for self-satisfaction. This immense revenue is possible in this tiny little island of ours in the North Sea, because of the industry of our people and the enterprise, courage and initiative of both our industrialists and working people. It is a great credit to the whole country that at this time, in 1944, the fifth year of the war, we can show increased revenue from taxation and an assurance that we shall get the necessary balance out of the savings of the people. I was very glad that my right hon. Friend referred to the generous contribution of great promise to us from Canada, but we ought not to overlook—and there is a danger of it—the fact that we have the advantage of Lend-Lease machinery with the United States of America. If it were not for the co-operation of the American continent and the Dominions, the record of our financial position would be a very different story.
But, from my point of view, the greatest anticipation of the Budget Statement of my right hon. Friend is his anticipation of post-war conditions. I agree with him that times are going to be very difficult when the war is over. When the war with Germany is over, we shall still have in the offing the difficult problem of the war in the Far East. But it is right and sound that, in making his statement to the nation, he should give encouragement to those responsible for the industry of the country, to make their blue-prints in anticipation of post-war conditions. I fundamentally agree with him. It cannot be too often repeated that we shall, after the war, be a debtor instead of a creditor country. If

we are to carry on after the war and keep our people on the same standard of living as they had before 1939, we must have a large and increasing foreign trade. That will depend upon the initiative and enterprise of our people, but they must have, as the right hon. Gentleman so rightly says, the wherewithal to do so. Therefore, it is right that he should have attempted to work out such improvements of our industrial organisation, through the machinery of finance, as will mean that our industrialists are not handicapped in competition with industrialists of other countries. Particularly that applies to their being encouraged to invest in capital assets by the improvement in the machinery of taxation and to invest more in scientific research, where we are very much behind other countries and have a good deal of leeway to make up. I believe, too, his emphasis that it is the policy of His Majesty's Government to aim at full employment, will be a measure of hope to those men now engaged in the perilous work of waging war. Their one terror is that, when the war is over, they may be faced with mass unemployment with all the uncertainty and the appalling evils which followed in the last post-war period. But that the right hon. Gentleman should spend half an hour of his statement trying to give confidence that the Government are facing up to the problem and thinking it out, will be a message of hope to those men in the Services.
We have another year before us. I recognise that every one of us in this House has his responsibility to hold up the arms of the Chancellor of the Exchequer in these difficult times. There is a tremendous temptation to press upon him all kinds of extra expenditure. He has always the unpleasant task of footing the bill and sometimes of having to put his foot down. Our pledges as a Parliament, more or less to social security, to a housing policy, to a forward education policy and to a generous system of pensions will cost money, and we realise the Chancellor's difficulties. But in the statement he has made, he has shown a grasp and understanding of the position which, I am sure, will give the Committee the confidence to support him, when he is in difficulties, and when he has to be unsympathetic as well as when he can give a satisfactory reply. I do again congratulate him on the success of his first Budget Statement. I only hope—and I


cannot say anything better—that his statement next year will be equally satisfactory.

Mr. Holmes: I think I have known the Chancellor of the Exchequer longer than most Members of the Committee and I have followed his career with the greatest interest and admiration. It will probably be a very long time before the general public understands the great contribution which he has made to our war effort during the past four and a half years, and this is not the time to dwell upon lit. Ho has, to-day, opened his first Budget and he has followed largely the lines of his predecessors. It is obviously no matter of "following my leader," because there can be no doubt that the late Sir Kingsley Wood consulted with the present Chancellor and that the policy which has been carried out in the past few years and was embodied in the Budgets of His Majesty's Government, had his full approval.
It would be difficult to find anybody in the country who would quarrel with the financial policy of this country since 1939. There have been, of course, people who have been critics from time to time but I think most of them have realised in due course that the Treasury were right and that they were wrong. Let me call attention to the main principles which underlie our financial policy. It was recognised that expenditure was going to be on a colossal scale, and that a long-term policy must be faced. The determination by the then Chancellor of the Exchequer was that the necessary money should be obtained, approximately half by loan, and half by taxation. The Chancellor has shown us to-day that we have done even better in the way of raising money by taxation than he or we expected. The second most important decision to my mind was that we should raise our loans by voluntary means. There were some who were of opinion that there should be a compulsory extraction from people's income, but the Treasury were right. The people of this country hate control, whatever the Minister of Home Security may tell us, and would resent any attempt to dragoon them into a compulsory system of war contributions. But they enjoy the "Salute the Soldier" weeks, and enjoyed the weeks held in previous years, with the competition of town against town, and

all the variegated social events bound up with them.
In the next place, our war financial policy has been that those who have the largest incomes should make the largest contribution. The effect for the past four years has been that over a certain limit Income Tax and Surtax have amounted to 19s. 6d. in the £ for example, the very few people in this country who have an income of: £72,000 a year pay £67,000 a year in Income Tax and Surtax. An eminent Socialist, Mr. Bernard Shaw, has pointed out that if he did any work in any year the Treasury took all the money, and gave him a commission of 6d. in the £ to collect it. But the war has to be paid for and those with broadest backs have, rightly, to bear the biggest burden. Then the Chancellor and his predecessor proceeded to tax luxuries and those commodities that are not essential to existence —tobacco, beer, cosmetics and many other articles which add to the pleasantness of life for men and women. But the Treasury took an entirely opposite view with regard to essentials. Food is the principal necessity, and it was decided that in order to keep down the price and prevent inflation, subsidies would be paid by the Treasury. The wisdom of this cannot be doubted.
This financial policy which I have briefly and inadequately sketched, has resulted in our being able to finance the war expenditure without more than minor inflation, and has placed us in the position that we shall be able to deal with post-war conditions without unnecessary difficulties. We have heard a very interesting and instructive talk to-day from the Chancellor of the Exchequer, with regard to post-war prospects and post-war finance, and one must pay a great tribute to him. I am sure it is something we shall all want to read over again when we get our OFFICIAL REPORT in the morning; and it certainly was most helpful and instructive to us all.
I only want to refer to two further matters. The first is Pay-as-you-earn. Some of us will remember Albert Chevalier's song "Mrs. 'Enery'Awkins," of whom it was said:
First she said she wouldn't,
Then she said she couldn't,
Then she said, 'Well perhaps I'll see'.
That was the attitude of the Treasury with regard to pay-as-you-earn. When,


at last, they said they would see, and they settled down to the job, and decided that they could do it, they have been splendid and I think a great tribute should be paid to them for having worked out, at great speed, a most difficult system of taxation with both ability and sympathy. This system has been in force for about three weeks, and, of course, there has been a certain amount of grumbling, both by employers and workers. Now to employers I would venture to point out that pay-as-you-earn is much more satisfactory to the workers than the previous system of commencing to pay tax on earnings received nine months previously, particularly if, owing to seasonal conditions, the wages at the time when the tax was imposed were less than the wages when the pay subjected to tax was earned. I would urge employers to recognise that they are rendering a national service if they assist to the utmost the implementing of this new system. To the workers I would urge that they need not worry if a few pence too much is deducted by way of tax from any weekly pay packet. Any over-payment can subsequently be put right; at the end of any financial year ending 5th April, the amount payable by any worker for the whole year can be ascertained and, if it is found that the total of the tax deducted week by week exceeds the amount for which the individual worker was liable during the year, a refund will be made. For example, if a shilling a week too much is deducted from a worker's wages through the year, he will be entitled to a refund of £12S. at the end of it.

Mr. Keeling: Or vice versa?

Mr. Holmes: Yes.

Mr. G. Griffiths: And if there is any increase in the family, he gets so many pounds for it. A circular was sent round to all the workers. They know what the hon. Member is talking about.

Mr. Holmes: My hon. Friend opposite seems to think that what I am saying is unnecessary. I can only say that workers are coming to me constantly asking why 3d. has been deducted this week and 4½d. the next week and directly I tell them that it does not matter, as we can put it right during or at the end of the year, they are quite satisfied and do not worry.

Mr. Griffiths: A chap at the pit where I worked last week paid 7s. too much, but he got it back this week. He showed me the pay packet.

Mr. Holmes: That is all I want to say with regard to pay-as-you-earn. With regard to Excess Profits Tax, one knows perfectly well that this was a tax imposed in time of war. The Chancellor practically said to-day that it was not a tax from the Treasury but a political tax, put on for definite political purposes. It was described some time ago by "The Times" as "a rough and ready war-time expedient." Well it is; it is very rough on a number of people. The Chancellor appears to recognise that it is a tax which is unfair, as between man and man and trader and trader. Although he may refuse concessions at the moment, I hope he will continue to pursue his thoughts on the matter, for it is obvious that he is aware of the inequalities. Probably, by next year, he will be able to do something to remedy them. In mentioning these two points, I want once again to congratulate the Chancellor on his first Budget.

Sir Adam Maitland: There is great wisdom in many of our Parliamentary customs and traditions, and we find from experience that they are founded upon the knowledge which has been gained by those who have preceded us in this House. It is a tradition that on Budget Day, immediately after the Budget Statement, nothing is said but a few words and complimentary remarks to the Chancellor for his feat of delivering his Budget Statement, and congratulations upon his proposals. It is in the light of reconsideration and reflection that the real discussion comes, and I think that is the wisdom of the tradition which has grown up in this House that there should be no long speeches, and certainly not of criticism, immediately after the Chancellor has resumed his seat. I propose to follow that tradition but I would also like to follow tradition and pay a tribute to the Chancellor for a statement to which we have all listened with great interest. I think it is essentially a statement which we shall want to read and carefully consider, and I hope it will be found to be worthy of the consideration we can give to it. One thing certainly struck me, that the Chancellor was not content just to speak about the achievements, which he might well have


done. I believe that at the proper time, and when these things can be seen in right perspective, not the least of the achievements of this nation in the war effort will be found to have taken place in those realms of finance which are so mysterious yet which indirectly and directly affect every person in this country.
I think that the way in which the people have responded to all the calls made upon them, to the onerous taxation which has been imposed, the cheerful and willing way in which they have in fact always been ahead of the Executive in their readiness to bear these sacrifices, is not the least of the nation's achievements. The right hon. Gentleman the Member for Wakefield (Mr. Greenwood) said that, so far as he and his immediate friends were concerned, they were still in good heart, ready to give and ready to bear any sacrifice demanded of them. I think he spoke not only for his own immediate friends but for the Committee as a whole. Yet we must remember that we shall also probably say, "Thank heaven there are no new taxes in this Budget." Probably the dominating note of this Budget is that the Chancellor has not imposed any new taxation. On that he is to be congratulated and on that, too, I think we may see a ray of hope for the future. Budget Day is not only stocktaking for the past but a glimpse of the future, and I was very much impressed by the suggestions of my right hon. Friend with regard to the way in which he is proposing to help industry in the future.
I regard this not so much as a matter of pounds, shilling and pence but rather that we in this Committee have a distinct duty in regard to the laying down of certain fundamental principles in regard to all matters which affect taxation. One of those principles is that the wisest taxation is that which can be borne most easily by those upon whom it is imposed. It is not necessarily sectional. It is merely platitudinous to say that taxation must be placed upon the shoulders of those best able to bear it.
It is important that in any taxation which we impose we should have regard to all the reactions of that imposition and, therefore, I was particularly glad to hear that in the suggestions the Chancellor made for helping industry the background of it was: What proposal can I make which will have the best effects on

the general welfare of the community at large? Not the least of those considerations which I am sure the Chancellor had in his mind was the desire that we all have that in any legislation which is proposed it shall all tend to absorb into industry, when the war is over, the people who come back from the fighting fronts, in a way which will will give them the best conditions and remuneration possible.
I welcome the proposals the Chancellor made, although I think they may cause disappointment in certain industrial quarters, particularly the proposals in regard to depreciation allowances. I do not know whether my second thoughts will be as complimentary as they are now, but I can say at the moment that we have much enjoyed the speech of my right hon. Friend and that we congratulate him upon being the first Chancellor to come here in war-time and present a Budget with no new taxation. It is hoped that by the time the next Budget comes along there will be some remittance of taxation. Indeed, my right hon. Friend hinted that it may well be that, if certain events materialise, the expenditure which he has predicted to-day may not, in fact, be incurred. Then I am sure that Members on all sides will ask, not how my right hon. Friend proposes to raise taxation, but how he proposes to divide the surplus. I congratulate my right hon. Friend and wish him good luck in the years to come.

Sir Waldron Smithers: Last July I was taken seriously ill and was at death's door for four months. This is the first occasion since then that I have been able to address the House and I want first of all to say a big "Thank you" to hon. Members of all parties for the great kindness they extended to me while I was ill.
The Chancellor of the Exchequer has made a remarkable statement to-day. It was a courageous statement because it was true and
Truth alone shall make us free.
He referred among other things—and it is difficult to follow the points of a long speech immediately after you have heard it—to the three great dangers facing this country—the danger of inflation, the danger of loss of our export trade and the danger of losing the stability of sterling and our means of exchange. I propose to deal with these. He used many words


but I suppose that the word he used most was the word "pound." The buoyancy of the revenue during last year has been remarkable, and that buoyancy has been due mainly to the fact that our Treasury and our financial advisers have stuck to sound principles. I would remind the Chancellor of a saying of Burke's:
To tax and to please … is not given to men.
I am sure my right hon. Friend realises that, and means to be quite fearless and that in later stages of our financial discussions, he will stick to sound principles, face facts and turn a deaf ear to the theorists and the vote-catchers. If he will do that, then he will be rendering an inestimable service not only to this country but to the whole world, because if things remain stable in England she can make a tremendous contribution to the stability of the whole world. If my right hon. Friend sticks to sane and sound principles, he will also be doing an inestimable service especially to the poorest of our people. I would remind my right hon. Friend of what the Minister of Labour said recently:
If Britain stands as a stable economic influence she will play her greatest role in history.
The Chancellor as I have said mentioned the word "pounds." I would like to ask: what sort of pounds? Are they worth twenty, fifteen or ten shillings? Unless the purchasing power of the pound sterling is maintained, the Chancellor has less real value to collect and, therefore, less real value to distribute. I suggest to Members and to the public as a whole that it is in our best interest, that it is our duty, to back up the Chancellor in trying to avoid any undue inflation. If we do not, we may disintegrate in a generation, in the same way as France disintegrated after the last war. It is our duty to face facts. When we consider the demands that are being made almost daily through the representatives of the people by the hundreds of thousands and even by millions of our fellow subjects for increases in pay and allowances and wages, and other Government expenditure, what is really meant by these demands is that we are asking the Government to distribute millions more of what we call currency notes. When the Financial Secretary replies to the Debate, I would ask him to try to deal with the question which is so

often asked, namely, how we can spend £14,000,000 a' day in war-time, and not spend that amount in peace time.

Mr. Logan: If it were well spent, it would be good economy.

Sir W. Smithers: You cannot spend it, if you have not got it.

Mr. G. Griffiths: That is true; that is why they want it.

Sir W. Smithers: The pound note, which may be called the unit of our currency, is the means by which we exchange goods and services, and it is very important to everybody to consider how much goods and how much service the pound note will command. The value of the pound sterling is what it will purchase in this country; it is impossible to export sterling. If I owe a debt to a fellow countryman, I can pay him in pounds, shillings and pence, but if I owe a debt to a foreigner I have to go to an exchange dealer and buy from him the currency which is used by the foreigner, whether marks, francs, escudos or dollars. It is vitally important to every one and to our food position that the pound sterling, as the Chancellor said, should remain stable and should command as much foreign currency as possible. If the Committee will forgive me, I want for a moment to go into some detail, because I do not think the position of how the pound sterling works is properly appreciated. The pound note—I have one here—reads as follows:

Mr. Logan: Will the hon. Gentleman send some samples round?

Sir W. Smithers: It reads:
Bank of England. I promise to pay the Bearer on Demand the sum of One Pound.
That is signed by Sir Kenneth Peppiatt, the Chief Cashier of the Bank of England. Suppose I walked into the Bank of England to-morrow and said to him "I have here an I.O.U. on the Bank of England and I ask you to redeem it"? What would he give me in exchange? He could only give me another piece of paper, another £ note, except that up to £2 he could pay me in silver. Why is it that you can take that piece of paper to a station, cinema or a shop and buy a ticket, a seat or some food or other


necessaries of life? Behind that piece of paper there used to be gold. But gold is no longer there, and to-day there is behind that piece of paper, other pieces of paper, namely Government securities, and the Bank of England holds those Government securities as a security for our currency notes. Having mentioned the Bank of England, may I pay a tribute to the retiring Governor, Mr. Montagu Norman—

The Deputy-Chairman (Mr. Charles Williams): Not now.

Sir W. Smithers: The securities behind our currency are good, because the British taxpayer is behind them. The Sinking Fund and the interest and the redemption money are secured on the taxable capacity of the people of this country, the most law-abiding people in the world. There is no finer security. The Chancellor, if I remember rightly, said that we have another great asset behind our currency and the purchasing power of the pound sterling, namely, confidence at home and abroad in the integrity, honesty of our people, in our Constitution and in our institutions. He also said that we have had in this generation to pay for two wars. We have parted with an enormous amount of wealth, and they have cost enormous sacrifice and lives. But we still have that personal and individual character and the knowledge and experience of our business men, second to none in the world. Therefore, once again, we can offer that character, knowledge and experience in the service of mankind.
I would ask the Committee to bear with me while I examine the Bank of England return in regard to currency notes. This return is published every Thursday and appears in "The Times" every Friday. The amount of currency notes in circulation last Thursday was, in round figures, £,1,121,000,000. About £30,000,000 of those were on the credit side of the banking department. The Bank of England is divided into two departments—the issue department and the banking department. In the issue department it acts as agent for the Government and any profit on the issue of currency notes is paid to the Government, and the amount of the profits for the last year for which I have figures—1943—is just over £9,000,000. The real value of the currency notes is equal to the real value of the Govern-

ment security behind it. If more notes are issued than the financial and economic structure of the country can bear, the result must be inflation, and the purchasing power of the pound sterling goes down. Roughly, if you double the issue of the notes you halve their value, and you get into what is called the vicious spiral. I have here a whole packet of German notes printed just after the last war. They are nominally worth £1,000 apiece. Soon after these were issued, they were not worth the paper they were written on. You could not get your boots blacked for £1,000 because the Germans used the printing press, to try to catch up their national expenditure.
The Chancellor referred to our post-war position and some of the difficulties we shall have to face. There are certain facts which are not party politics at all which Members of all parties have to face. One is that England is different from every other big country in the world, in that we are not self-supporting. We are compelled, in order to live, to import from a third to a half of our food and raw material and partly owing to the money that we spend in the cause of freedom, our economic position is declining. In 1913 we had a credit balance of trade of £206,000,000. In 1938 there was a debit balance of trade of £54,000,000. So that between 1913 and 1938 we were £260,000,000 worse off. Germany went in for inflation because she is more or less self-supporting. Even with their currency down to zero, the German people were still able to live and at the same time to build the ghastly war machine which has brought such devastation and trouble into the world, and if we are not careful it is necessary to state the unpalatable truth that it is Germany's fate that we are in some danger of repeating. If the Chancellor were to agree to all demands made on him for increases of Government expenditure of every kind, he would be agreeing to the issue of inadequately secured currency notes and you might arrive at a situation where if a man received £20 he would be getting only what £3 £4 or purchased previously. The other day the Secretary of State for War pointed out the danger of inflation when certain demands were made for increases of pay and allowances. Of course he wants to do the best he can for the serving soldier, but he has been


secretary to two or three Chancellors of the Exchequer. He knows the danger of inflation and quite rightly pointed it out. The Minister of Labour, with all the responsibility and knowledge which office brings, said recently that Parliament is becoming largely a Dutch auction with parties engaged in a regular campaign of competition. He, as an old trade-union official, did not want £10 a week if he could buy only £2 worth of stuff with it. He would rather have £5 with which he could have £5 worth of stuff. Mr. Ramsay MacDonald, speaking at Kilmarnock in 1933 and referring to the crisis of 1931 said:
Two years ago the problem we had to face was not merely a question of the distribution of wealth. It was a question of the existence of the wealth itself. Boldness, courage and honesty were required to face the situation.
Those words were spoken II years ago. How true they are to-day! It is courage and honesty that the Chancellor has shown to-day. Inflation results from the creation of a vast amount of additional purchasing power owing to the enormous excess of the public expenditure over the revenue from taxation, and the rapid increase of our colossal National Debt.
I want to put up one or two suggestions of what my right hon. Friend can do to avoid inflation. He can increase taxation. He can persuade people to increase their private savings. I should like to join with him in the tribute he paid to Lord Kindersley and his collectors all over the country. He can appeal to the people to spend less and to save more. My third suggestion is that he should press as hard as he can, for a reduction of public, as opposed to private, expenditure and waste. Not nearly enough attention has been given to this aspect of the matter. Someone worked out the other day that, by drawing a comb through the expenditure and waste in the Government Services, £1,000,000 a day could be saved. I do not know how true that is, but I think that more attention should be paid to this aspect. The Chancellor referred to the policy of stabilisation. Before this Budget the Treasury was stabilising the prices of food and the necessaries of life to the extent of £200,000,000 a year, and that money, spent on stabilisation, meant 6s. a week to every man, woman and young person engaged in industry. In addition, it was of great benefit to people

with fixed incomes and old age pensioners.
I would take up a point my right hon. Friend made about small savings. I have it from an authoritative source that the small savers have accumulated the astounding amount of nearly £6,000,000,000. Having lost our overseas investments, the interest on which came back here in meat, maize, coffee and so forth, however wonderful the response that has been to the War Savings, Warship Weeks, Wings for Victory Weeks, and the Salute the Soldier Weeks, those savings invested in Government securities, are only a claim on home products. They will not give us the right and the title to import a pint of petrol, or a quarter of wheat or any commodity from abroad, and that is a very serious position indeed. It is only common justice, when the time comes for these loyal small savers to draw out what they have put in, that the pound they draw out should be as nearly as possible of the same purchasing power as the pound they put in. The Prime Minister said in his broadcast to the nation on 21st March, 1943:
At the end of this war there will be 7,000,000 or £8,000,000 people in the country with £200 or £300 apiece—a thing unknown in history. These savings of the nation, arising from the thrift, skill, or devotion of individuals, are sacred. The State is built round them, and it is the duty of the State to redeem this faith in an equal degree of value.
Neither the Prime Minister nor the Chancellor of the Exchequer is omnipotent, and it is the duty of all of us to realise the danger of inflation and to back up the Government in every way we can. The Chancellor gave the figures of the National Debt as £19,593 millions. The total National Debt, in 1913, was £661 millions. These are formidable figures and the country will have to face them with courage. The difficulties can be overcome if we avoid inflation, and continue to apply sane and sound principles of finance. The right hon. Gentleman also referred to the help that we get from overseas. I wonder if the country realises what that really means. America is sending us, not only munitions of war, but food and raw materials on Lend-Lease principles. I do not know of any account that is being kept of this. I have not seen any published. Canada in 1942–43, made us a princely gift of £225,000,000 and in 1943–44 a further gift to the Allied cause on Lend-Lease principles of the same


amount, and she is going to do the same this year. I understand that Canada is also supporting the cost of her own forces wherever they are. This money is being given to us for one purpose and one purpose only, to win the war. We and they may, quite justifiably, ask whether we are entitled to use any of it to feather our own nests at home, and to make ourselves more secure in the world, where in many parts the word "security" has no meaning whatever.
We are no longer a creditor nation. In order to live we shall have to export physical goods because our power to import through invisible exports has been largely dissipated. And it is necessary that we should export goods at a price which the consumer abroad will and can pay. Whatever schemes are brought into operation—and I hope they will do something to alleviate the difficulties of international commerce—the fact remains that people will still buy in the cheapest and sell in the dearest market. The foreign consumer will not pay for our social services when the cost of those services is added to the cost of production of our goods, as it must be. The Chancellor to-day has talked about the cost of this and the cost of that, but there is one service we rendered to the world which cannot be assessed in terms of pounds, shillings and pence. That is the 15 months when we stood alone. Last Sunday was St. George's Day, and we commemorated the time when St. George stood up to the dragon and saved civilisation. I hope that our negotiators will see when the day of reckoning comes that that sacrifice and leadership on the part of our country are taken into account.
It is dangerous from the point of view of inflation to enact, now, too many proposals for the post-war period. It means going to the people and saying, "We will give you this, that and the other," and it is wicked and criminal and a cruel form of sport to make promises which may not be fulfilled to people., a large percentage of whom do not understand a lot about money and foreign exchange. By all means let us think things out, and be ready with plans, but do not let us commit ourselves too deeply until we know better how things will be after the war. The Prime Minister's plan is much better —a four-year plan after the war followed by another four-year plan when we know

better how we stand. We cannot take money out of the common pot unless we put something into it and you cannot make a pint pot hold a quart by appointing a committee.
The State is not a fairy godmother with a bottomless purse. There are many claims on the available wealth of the country, and in those claims there is, and must be, priority. The war is not yet won. It is costing £14,000,000 a day. We have pledged ourselves to finish the war against Japan when the war with Germany is over. Then there will be the cost of an army of occupation. It is no good beating the Germans unless we keep them beaten, and we must have some share in whatever policing may be necessary. Then there will be the servicing of the National Debt and the payment of interest and the repayment of capital to those who so loyally put up the money to win the war. We will have to go to the help of the occupied and satellite countries when the war is over. A fortnight ago, a B.B.C. correspondent, broadcasting from Naples, pointed out the ghastly conditions of the people there. There were no trams buses or banks, their savings were gone, and there were no water, sewers or gas. All they asked for was food, and food now. That is the condition of the greater part of occupied Europe. Surely one of the first claims on the resources of the world must be to help these poor people.
The idea that material comfort is our chief goal and aim, that we should avoid hardship and sacrifice, that we can have security without sacrifice, and that we can harp always on our rights instead of our duties—all these things lead to decay and to inflation I would like to make one last quotation and to revive the memory of one of the finest characters I ever new. He was Mr. Murray Brumwell, of "The Tinics," and he wrote this:
These are grave days, and democracy in this country will soon be put to the grand test. Will it show itself worthy of its inheritance, or will it allow itself to be led captive by politicians and planners who promise it everything but freedom?
The ability to pay taxes, the happiness of our people and material prosperity necessitate a spiritually-reinforced foundation. If we apply sound principles, if we avoid inflation, if we, by hard work and lowering cost of production, regain our export trade, we can, we must and we shall, climb the hill of difficulty. If we


depart from sound principles, if we do not face facts and the truth, then we shall rush down the hill and, like the Gadarene swine, be drowned in the sea of destruction.

Mr. Logan: I listened with great pleasure to the words of the Chancellor. This is the first time in the fifteen years I have been in the House that I have intervened in a Budget Debate. To-day the Chancellor is marking a wonderful epoch. Reading some of the books of a few years ago, I found references to a Chancellor telling the nation in a four hours' speech, that with a £90,000,000 Budget there was likely to be disaster. Yet to-day we have a Budget of £6,000,000,000, and we seem to go about our duties in the ordinary commonplace way.
References have been made to the question of inflation. I am not a pessimist with regard to this matter. I used to handle reichmarks and sell them 40 to the pound sterling. They got to 1,000, then to 20,000 and to 30,000. I remember the time in Vienna when currency of the nominal value of £600 which had only just been made would be put on a table, and you would be offered a Hamburg cigar for it. I do not think we need be afraid if we use the common sense that Englishmen ought to use, in regard to the question of where we stand. I view economics, not from a Marxian point of view but from the practical point of view of experience in life and from experiences in handling money all my life, though retaining very little of it. My wife also handled a lot but retained very little, and we came down to a 50–50 basis. That is how the Chancellor stands. I was pleased that in that 50–50 process the Chancellor made no further depredations in regard to money. I was pleased also that he dealt with the questions of research and our industrial position. If this nation is to be important in the world, our lusty manhood and our employers of labour must co-operate. Therein will lie the strength and unity of our country. Our factories and ironworks must get busy, and our Mercantile Marine must sail the seven seas. Thus will employers of labour be able to learn that, not by reduction in the earning capacity of their people, but by "the economy of high wages," shall we prosper and avoid the evil of inflation.
The Budget is unique. It teaches employers and labour that, in the coming new era, co-operation will be most essential. I do not know of any period of history when co-operation has been more needed for the salvation of an empire. There will be a new world in which men will have to think and move differently from what they did in the old. Young men will want better openings in life, not needing to go out to foreign lands in order to earn their living as did my own sons when they came back from the last war. We ought to be able to provide in the future not only the markets for our industry, but the brains, sinews and muscles of every Britisher, in whatever part of the world he may be placed. We have sustained the brunt of this war, and I know of no better bond than that of the man who impresses upon a note the promise that, if given the power, he will work, and pay.
I have no fear that we shall not be able to rise to the occasion. Sacrifice has been unquestioningly made by the youth of this nation in the war. They have gone out to protect a sacred little bit of their country, a bed or a fireplace in the ordinary surroundings of the cottage or the mansion, in order that they might be able to come back to their own homes when it was all over. Every man in the three Fighting Services is looking forward to the day when he can come back to a happy, peaceful England. It is for legislators and others who have the true interests of the nation at heart to co-operate to prevent that hope being disappointed.
When the war is over, we shall not go into a time of dreams and imagination. There will be a hard world before us, not roses and sunshine. Markets will have to be found, and work be done. The foundations are being laid to-day. The prospectus is now being placed before us. I can see country life being revivified, industrial plant coming to life in our engineering factories, industries getting rid of rotten, obsolete stuff and putting up-to date machinery in its place. Employers will be compelled to pay an honest wage to their workers, who will give a fair return by the use of up-to-date machinery. In the past, that has not been the case, industries having been bolstered up with improvised machinery which no foreign firm would have tolerated. In future


cheapness must not interest us as a nation. We must produce the best, after studying the results of scientific research, and, with the help of the State, this country's factories and workmen will enable us to meet our liabilities.
I am pleased that the Chancellor has to-day brought forward a Budget which will make men think and work for a system in which we shall work in cooperation, and in which new machinery will be given a chance to operate. The technical school will have to take the place of the grammar school, and many boys will have to be taught trades in order to become skilled craftsmen. If we get co-operation we shall get a happy family, and there will be no fear of not having a chance for a fuller life.

Sir Robert Tasher: In considering Budget proposals we first ask whether they will inspire confidence, and secondly, whether they will be agreeable to the majority of the people of the country. The third and most important question is, Are they just? In view of the fact that no alterations are proposed by the Chancellor to present taxation, I suggest that now is the time to correct Sections of former Acts which operate oppressively against one section of the community. I therefore invite the attention of the Chancellor to Section 7 (7b) of the Finance Act, 1894, which says:
The value of the benefit accruing or arising from the cesser of an interest ceasing on the death of the deceased shall if the interest extended to less than the whole income of the property be the principal value of an addition to the property equal to the income to which the interest extended.
I submit that this language is unintelligible gibberish to the ordinary layman. It has been interpreted by the Estate Duty Office in the following manner: If a person dies and leaves stocks and shares, and there is an annuity on those stocks and shares, no duty is payable, but if the annuity is upon property, then duty is payable. In other words if Mr. A secures an annuity from the Post Office or from an insurance company no duty is payable. If, however, the same amount of annuity is upon property duty is payable. There is nothing to prevent the Post Office or the insurance company investing the sum paid for the annuity in land or in any other commodity. This cannot be right. I suggest to the Chancellor that here is an

opportunity to correct this misinterpretation of what a former Parliament meant.
There is another direction in which I invite the Chancellor to make investigation, and that is the extraordinary number of Rules and Regulations issued by the Treasury which have all the force of law. The House is not consulted about these things. The Horse has given the Treasury power to make Rules and Regulations, which they proceed to do. They can and do interpret and give rulings in any manner they choose. May I point out that in the majority of cases when such a ruling is given the taxpayer is in the unfortunate position of being defenceless? His only remedy is through a court of law. The majority of people cannot afford to contest the ruling in court. The rich man might, certainly, but the ordinary individual cannot, if it is a contest with the Inland Revenue or one of the various Departments acting under the Treasury, because he would be facing ruin. One knows from experience that if one is in conflict with the Inland Revenue or a Government Department one's redress is to a court of law. If the Inland Revenue lose they go to the Court of Appeal. If they lose again they will go to the House of Lords. Having gone through those three stages the small man will be hopelessly ruined.
I want to submit to the Chancellor that this is un-English. It is unconstitutional, it needs correction. Do not let us drift into the position of regarding the State as a deity and the official as omnipotent. In a case which I sent to the Chancellor of the Exchequer, a trustee is bound to comply with the law and in endeavouring to do so he may run foul of the demands of the Exchequer. One might not as a trustee agree to the value of the property of the trust made by the District Valuer, why may say it is worth X pounds. If the trustee disagrees he is placed in a most unfortunate position because he is required to make a false declaration saying that the property is worth 25 to 50 per cent. more than its real value, which will be to be placed in an impossible position. He is compelled to pay the demand of the Estate Office. Surely, this is the opportunity, in the Budget, to correct something which is quite wrong.
Let me give another example. The House determined that for purposes of


war damage the value of property shall be that of 1939, but the same Treasury, through the District Valuer, value the property at what he considers the value at the time of death, namely 1944. If they value the property to-day at 50 per cent. more than before the war the successor to that property will have to pay duty on that 50 per cent., though if the property were destroyed by enemy action the amount of compensation would be limited to the 1939 value. I will not weary the Committee by quoting dozens of instances, but I am saying to the Chancellor that such an extraordinary condition of affairs undermines the confidence of a vast number of people who have invested their all in property. No Government can expect to enjoy the confidence of people who feel that they are victims of oppression through a Government Department. I regret to have to criticise the Treasury because I would pay tribute to one section of it, the Inland Revenue, which deals with Income Tax. My experience is that their decisions are governed by equity. After all, in this House we are responsible for the legislation they administer, and I am bound to say that I believe the Inland Revenue officials find themselves in the same unhappy position as the taxpayer. Do let us bear that in mind. In any strictures I may indulge in in connection with the Treasury I am not unmindful of the fact that many of their difficulties have been brought about by ourselves. Do not let us put the blame on the wrong shoulders.
I will give one short quotation from the Prime Minister. He said this:
It must be remembered that the function of Parliament is not only to pass good laws, but to stop bad laws.—[OFFICIAL REPORT, 4th April, 1944; col. 1803, Vol. 398.]
I appeal to the Chancellor of the Exchequer to make directions and bring to an end these bad laws. It seems to me that unless it is done under the Financial Resolutions there will be no other opportunity during the year. I am one of those who said that I would wholeheartedly support taxation up to too per cent, on profits made out of the war. But with the qualification that such taxation should include everybody; it should not be limited to employers. If it had included everybody, many of our labour troubles would have been avoided. Mr. W. L. Moylan said recently that the Excess

Profits Tax is unjust, and he gave this reason:
It is, in fact, equivalent to saying to a worker, 'You shall not earn any more wages beyond your pre-war amount, no matter how efficient you are or how hard you work.'
The Chancellor has pointed out that, in certain mitigating circumstances, a 20 per cent. repayment is to be made at the end of the war. I wonder whether it would be wise to say to the whole of the manufacturing community at the end of the war, "Here is 20 per cent. of the Excess Profits Tax that you have paid during the war." Would they be able to spend it; would labour be available, would materials be available? It should be recollected that there will be £250,000,000 to £300,000,000 repaid to operatives, described by a former Chancellor of the Exchequer as a nest egg. If you are going to throw all that money on the market, I seriously suggest to the Chancellor that there will be the danger of inflation, because there will be so much money to spend that people will be just throwing it about. I observe that other Members wish to address the Committee, and, therefore, I will cut out about 90 per cent. of what I had risen to say. I have made it a rule to address the House for not more than 10 minutes, and I intend to observe that rule to-day. I hope that what I have said will engage the attention of the Chancellor of the Exchequer.

Commander King-Hall: I will certainly keep within 10 minutes with the few observations that I wish to make. I wish to pay my tribute to the Chancellor for what he has said to-day, and to explain why I liked his speech. The feature about his speech, and about the whole way in which the Budget was presented, that struck me was that it was essentially a non-party approach to our economic problems, an independent person's approach to these problems. It comforts me, as an Independent supporter of the National Government, to notice that the Chancellor of the Exchequer has not a party label tied round his neck in the books of reference. If it is good enough for him, it is certainly good enough for me to be described as a National Member of Parliament. Another thing about the speech was that it was essentially non-emotional. It was a scientific examination of our economic problems, based, I am sure, on a very


careful examination of the facts put before him, no doubt, by his experts. I was not surprised at that, because I think that my right hon. Friend has a scientific mind. If there was any emotion in his speech, I thought I detected it in those passages in which he was able to make taxation concessions in the interest of scientific research. That seemed to me to be, in particular, the part of his speech which came from his heart as well as from his head. One of the dangers to which we have to face up is that not only is an enormous amount of nonsense talked about our economic problems, but an enormous amount of emotional nonsense is talked about them.
One could describe the Chancellor's attitude as coming between two extremes. One extreme is the school of thought which says that pounds, shillings and pence do not matter any more. One hears it said—and I am bound to say that it is a view taken by many people in this country—"One thing that this war has done is to show us that it is no good saying that we cannot afford to do anything." That is one extreme statement; on the other side there is the extreme statement, "Finance governs everything." Neither of those statements is true: they are both mis-statements, and the truth lies between them. The great value of my right hon. Friend's speech was that it was a corrective between those two extreme statements: on the one hand, that pounds, shillings and pence do not matter any more, and, on the other, that finance is the governing consideration. What the Chancellor really told the nation is, "You cannot afford everything at once, and, if you want to have anything at all, I will tell you what you have to do. You have to be efficient and you have to export. Those are the two fundamental considerations, and your standard of living will entirely depend on the efficiency with which you produce, which, in its turn, will govern the price for which you can export abroad."
Another point about the Chancellor's speech will, I believe, be noted in the history books of the future. I believe that he was deliberately laying the foundations of a long-term economic policy. There was a continuity about it. I have not been in the House long enough to have heard many Budget speeches, but I have read many of the Budget speeches of the past.

Nobody reading the Budget speeches of the last 50 years will find any real economic continuity running through them. To-day, the Chancellor has laid the foundations of a continuity of economic policy. A corollary goes with that. I would like to support what was said by my hon. Friend the Member for the Scotland Division of Liverpool (Mr. Logan). He drew attention to the need of co-operation in industry. Of course, that is going to be the essential thing: there must be co-operation in industry between capital and labour. But I would like to ask the Committee, both sides of it, Can you have co-operation between capital and labour, the kind of co-operation which is going to be essential to the successful carrying out of this long-term economic policy, of which the Chancellor has set up the framwork to-day, if you are going to have a political dogfight in Parliament between the parties? If you are going to have that co-operation, it will have to be running right through not only the economic side but the political side of our life as well. I am naturally prejudiced about this, but I cannot see how any Chancellor of the Exchequer, whether it is my right hon. Friend or one of his successors in a year or two, will be able to get up and make the kind of non-party, independent-minded, scientific speech about our economic problems that my right hon. Friend has made to-day without cooperation at all levels of our national life. I cannot see how my right hon. Friend, or his successor in a couple of years' time, is going to be able to do that if there is, in fact, a party dog-fight going on in this House, unless, by one of those extraordinary modifications of functions which the British people are able to bring about, the Chancellor, although a member of the Government, is not regarded as a party politician. That seems to me to be a more difficult thing to bring about than to stop the party dog-fight.
In one last word, I want to appeal to the Chancellor. I think he said somewhere in his speech something to the effect that so much depended on the self-discipline of the nation, and I strongly agree with him there. If we cannot get the nation to realise that a certain maintenance of control and maintenance of saving, about which I spoke in an Adjournment Debate last Friday, which I hope the Chancellor will look at, if we


cannot get the nation to do this by self-control, no amount of pressure from above is going to have any effect and the Chancellor's policy falls to the ground. I therefore submit to him the constructive suggestion that the Treasury should give thought to the question whether it is not the function of the Treasury, operating through the Ministry of Information, the B.B.C. and other organs of publicity, to begin the task of educating the people of this country in the economic facts which the Chancellor set forth so brilliantly, lucidly and clearly in his speech to us to-day.
The facts of war finance are set out in the admirable document presented by the Financial Secretary, but it is not a popular document. It is very popular among people trying to write popular articles or make broadcasts, because there is first-class material to be extracted from it, but it will not be a best seller nor is it intended to be. I ask the Chancellor to consider whether it would not be reasonable for the Treasury to produce a document informative to the public on what our financial system has done during the war, just as the War Office, the Admiralty, and Bomber Command produced their popular, yet accurate, books describing their achievements on the war front. The whole essence of the Chancellor's policy which he has launched to-day will disappear unless it is supported by the voluntary sef-discipline of the public, and I am sure the Chancellor will not disagree with me in saying that, in order to get that discipline, the public must understand what it is all about, what inflation means, and so forth. The blessing of the situation is that the public want to know about these things. They want this information and are thirsting for it, and I hope the Treasury will not think that to provide the public with this information and instruction is one of the least important of its duties.

Lieut.-Colonel Sir Walter Smiles: I would like to congratulate the Chancellor on having tried to erect an Anderson shelter over industry. Everybody here knows very well that our soldiers, sailors and airmen, and everybody else in the country, in the long run depend upon the industry of this country being efficient, and so I would thank the Chancellor, on their behalf, for the concessions

he has made in the direction of science and in the depreciation and obsolescence of machinery. When I was in Blackburn last week-end a man there said to me, "It is going to be very dangerous in this country, because we are going to be left with mills full of old machinery, and all our machinery manufacturers in England, and in the United States, and perhaps even Germany, are going to be getting to work to re-equip the mills and factories all over the world, while we here will be left with the old-fashioned stuff." It seems to me that the Chancellor has gone some way, in his Budget speech to-day, to meet that fear. We all remember that, after the last war, as was illustrated in the film, "Colonel Blimp," people said that we were a trading country and must put Germany on her legs again. As we all know, a tremendous lot of money was put into Germany, both by us and the United States, to re-equip that country, and we know the result.
As well as that, I think the Chancellors of the future must keep an eye upon the money sent from this country overseas. Look at Brazil. Brazil is starting a lot of manufactures at the present moment. Look at the Argentine. The Chancellor cannot say this, but I, as a back bencher, can say it. They got the money and the materials from us and then they do not pay us back. I do not mind them not paying us back when they are down and out themselves, but now these countries are very prosperous, and yet they are not paying their debts. One bank in San Paolo reduced the interest on its gold bonds issued in this country from 6 per cent. to 2 per cent., while at the same time paying 20 per cent. on its ordinary shares in its own country. Look at the Argentine railways and the dividends they are paying. Look at the Primitiva Gas Company. The Argentine Government are alleged to be only offering a quarter of a million for a property worth many times that amount. That money, if paid up in full, would come to this country and improve our exchange, but if they only pay a sixth of what people say the property is worth, taxpayers in this country will have to make up the deficiency.
I think many of us, especially those connected with small, director-controlled companies, ought to thank the Chancellor for the concession described on page 13 of his Financial Statement. It is a very


important one indeed to the small man, especially director-controlled companies. As the Chancellor said, it is proposed to increase by £1,000 their standards which are not computed by reference to the profits of a standard period. I think that is a most valuable contribution. Of course, you always get these borderline cases, and it is impossible for any Chancellor to legislate for them all. One could have hoped—but I am afraid it would cost too much—that the Chancellor would cut out the words, "which are not computed by reference to the profits of a standard period." That might cost too much money, but it would certainly make a difference to a great many companies and enable them to buy new machinery now.
I may quote one borderline case. I know a company, with the small capital some £20,000, which had a new engine on order which would cost more than 10 per cent. of its capital. This engine was on order in 1939, but, of course, the war came along and the engine could not be bought. This year, by using as much pressure as they could in putting forward their case, the company has at last got permission to buy the engine, and it is being manufactured now. But they fail, between two stools, because neither did they get the engine when it was cheap in peace-time nor, so far as I can see from what the Chancellor has said to-day, will they get any benefit from the Chancellor's proposal, as they would if the engine, which will have to be paid for in 1944–45, was to be bought in 1945–46.
I would point out to the Chancellor of the Exchequer that some of the countries inside the British Empire have not the Excess Profits Tax of 100 per cent. I am not saying I disagree with our 100 per cent. tax, as probably, on the whole it has worked out fairly, but, on the other hand, there are companies inside the British Empire manufacturing cotton and other things which only pay an Excess Profits Tax of 66⅔ per cent. Say an Indian and a Lancashire company each makes:£100,000 per annum more than its pre-war standard. At the end of five years the Indian company will have £150,000 more than the company in Lancashire and naturally will be in a much better position to put in new machinery and re-equip. The Chancellor of the Exchequer must pay very great attention to industry. The prosperity of all—

the doctors, the dentists, the soldiers and sailors, all—depends upon the industry and the manufacturing ability of this country.

Mr. Kirkwood: And the employers and shareholders.

Mr. G. Griffiths: It is the workers who produce everything.

Sir W. Smiles: All is produced by the man who works with his brain and the man who works with his hands. I am sorry that the Chancellor has not been able to grant some relief on one thing. The people who have suffered most from taxation and the war are the young married people with children. I hope that when he is able to make any alleviation of taxation he will first consider the young married people with two or three children. We have had Debates showing how the birth-rate has been falling and high taxation is largely to blame, but I believe it is very hard indeed for young parents to bring up children properly at the moment. I look forward to the time when Chancellors of the future may be able to allow £100 per annum free of tax for each child under 16.

Mr. Tom Brown: I want to add my compliments and congratulations to the Chancellor of the Exchequer upon his very able Budget speech. Perhaps it is due to his vast and comprehensive experience in the many walks of life along which he has travelled, but he certainly arrested our attention and compelled us, by his logic and eloquence, to focus our thoughts upon many things of great importance at the moment. He also carried us, with a great depth of vision, into the future, and what the future might hold for us, provided—and he made this stipulation very clearly and forcibly—we all played our part, business men, industrialists and workers. The success of the future, particularly in the post-war period, would, he told us, be dependent very largely upon how we played our part.
I was greatly disturbed by his long reference to the increased wages of the many classes of workers in this country. He gave to the Committee the impression of a sense of danger which would arise from increasing the wages of the workers of this country. He appeared, at the tail-end of his deliberations, to be rather


scathing in his remarks, suggesting that an increase of wages given to the workers of this country, would be a potent danger. On that point I completely and entirely disagree with him. I believe that, not only now, but in the days which lie ahead, the increased wages which have been conceded to the workers of this country, due to war-time conditions, will stand this country in good stead, provided those wages, such as they are, can be maintained. It would, however, be idiocy on the part of the Government or industrialists or business men to attempt to reduce the wages of the workers of this country.

Mr. G. Griffiths: There will be a row if they do.

Mr. Brown: Whether there is a row or not the future can only determine, but if we have to pull together, we have to pull together in the right way. It may be true to say at the moment—I have listened to these arguments both from these benches and from the opposite benches—"What is the use of giving workers high wages if they cannot purchase the goods?" While it may be true that there is a limitation on the spending of these high wages on the goods that they need, there is this to be said: While they cannot spend their wages on the things they badly need, because of the rationing scheme, they are investing their money in savings, and they are entitled, at least, to some compliment for that. They are saving their money when they cannot buy goods. But there will come a day—and the Chancellor was very optimistic—in the very near future, when the replacement of the goods which the workers so badly need, will have to take place. They will have to spend their money. I have always understood that the British working man is the best spender in the world, if he has the money to spend; and because he has it to spend, he creates additional employment and keeps in employment those men and women who produce the goods he requires.
I was very glad to hear what the Chancellor had to say on how he proposes to tackle the question of research work and scientific investigation. He has certainly been very sharp on the uptake after the Debate a few days ago. He has shown himself capable of seizing upon an opportunity after the Debate on scientific

research. I was particularly pleased to bear his reference to research in coal and oil. As an ex-miner, I believe that coal, which has, rightly, been described as the all-purpose commodity of this country, has been, to a very large degree, wasted in the past. A great many of the byproducts which ought to have been produced in this country have been allowed to flow freely away. At the moment we are told by the scientists that coal contains 240 by-products; we are only producing at present about 40. In the main, in this country we concentrate upon the production of four by-products from coal; one is gas, another is coke, another tar and ammoniacal liquor. Millions of gallons of ammoniacal liquor go down the sewers of this country, and this could have been avoided and it could have been used for the purpose of developing and increasing the productivity of our soil by the application of sulphate of ammonia, which is a very valuable fertiliser. I was very glad to note that the Chancellor is prepared to lend financial assistance to that particular aspect of research and scientific investigation.
I was also delighted to hear him make reference to the potential productivity of industry in the future. We have heard it said from time to time, not only in this place, but in another place, that this is going to be a poverty-stricken country after the war. I refuse to believe that we shall be poorer after this war, and the Chancellor has indicated that to-day. The potential productivity of this country cannot be estimated or described. We are possessed of the raw material and of the man-power, of the engineers and of skilful technicians and—I put this proviso in—if we can marshal all the forces that have been marshalled for the purpose of prosecuting the war, to the present stage, we can marshal those forces in such a way that the potential productivity to which the Chancellor referred will be an accomplished fact.
I have one regret. I was hoping, as the Chancellor proceeded with his speech, that he would make reference to some alleviation of the dire need of the old age pensioners. I was anticipating that he would, at least, come forward with something of a tangible character for the old-age pensioners of this country. He had an opportunity, but maybe he wanted to claim that he was presenting a Budget


which did not increase taxation: I think, however, that if he had introduced some new taxation, which was devoted to the alleviation of the poverty-stricken conditions of our old age pensioners, not one hon. Member would have made any complaint.
While the Chancellor has given the Budget for the country, I want to give the budget of our old age pensioners. Here is a budget for the accuracy of which I can vouch, of a single pensioner living in lodgings. His total income is 225. per week—10s. old age pension, 125. supplementary. Now for the expenditure. He has to pay 6s. a week for lodgings, 4s. 6d for two ounces of cheap tobacco—he is helping the revenue of this country—boots and clothes club 3s., recreation is., insurance to avoid a paupers funeral 6d., various things such as soap, razor blades and all the other incidentals which go to make up "the daily round and common task," another is. He has a total expenditure of 16s., but that does not include his food. He has 6s. left to provide 28 meals during the week, four meals a relay seven days a week. It works out at approximately 2½d. per meal. I do not think any man—I have made this challenge before—either on the other side of the Committee, from that Front Bench, or out in the country can justify the continuance of the inadequate pensions now being paid to our old age pensioners.
May I put another budget very briefly? It is the budget of a pensioner and his wife. They receive 205. old age pension and 19s. supplementary pension, a total income of 39s. Rent is 8s. a week, coal 4s. 6d. a week, boots and clothes club 5s., insurance is., two ounces of cheap tobacco 4s. 6d., household replacements is. 6d., light is. 6d. So you go on until the total expenditure for the things they require other than food is £I 10s, which leaves them with 9s. to provide not 28 but 56 meals, and this works out at just under 2d. per meal. Then examine what the old age pensioners of this country are called upon to do in the light of what has been done in connection with other walks of life. If you examine the cost per meal at British Restaurants, which are models of efficiency and cheap feeding, they, with all the modern appliances and opportunities to buy bulk raw material, cannot produce a meal at an

average price of less than is. Even school feeding—

Sir William Wayland: May I say to the hon. Gentleman that in my constituency the British Restaurants are offering very good dinners at 8d. and 9d.?

Mr. T. Brown: I do not doubt for one moment that the experience of the hon. Member opposite is of that character. I happen to be chairman of a British Restaurant, and we can produce meals at 9d., but I said that the average, taken over the whole country, according to recent figures published, is 1s. per meal. Even education committees, subsidised by the Board of Education, cannot produce meals at less than 4d. per head.

Mr. Kirkwood: Quite right.

Mr. T. Brown: I gather I am right on that score at any rate. There is an opportunity afforded here to the Chancellor of the Exchequer to come forward with a bold, courageous policy. Let us cease tinkering with this business; let us get on with the job and settle once and for all the pensions that are to be paid to our old age pensioners.

Mr. Hammersley: I do not propose to follow the last speaker, but to make one or two general observations on the Budget Statement. I would like to add my voice to the voices of previous speakers in congratulating the Chancellor of the Exchequer on an informative, impartial, scientific statement of our financial affairs. What pleased me particularly about the Chancellor's statement was that he emphasised, in effect, that wartime finance is not so much a balancing of revenue and expenditure as the use of our financial resources as an instrument of policy. It is in respect of that financial policy of which the Budget Statement is a main indication that I would like to make one or two observations.
Before I come to that I would like also to congratulate the Chancellor on removing certain hardships in connection with our industrial taxation matters which have pressed themselves on his notice. In connection with E.P.T., those concerns whose capital or substituted standard is the standard on which they are to be taxed, are to have this standard increased


by £1,000. That is all to the good, but it will possibly create certain anomalies and I would like the Financial Secretary to reply to this particular point later in the Debate. The Chancellor has given this extra £1,000 as an addition to the E.P.T. standard of those concerns whose E.P.T. standard is fixed by consideration either of their capital, or of some substituted standard, but he has not given it in the case of concerns whose E.P.T. standard is fixed in relation to their profits. Supposing you have a company whose profit standard is £2,500 and whose capital standard is £2,000. They have, of course, chosen their profits standard which is £2,500. Now, under the proposed legislation if they had in fact chosen the capital standard, their standard of profits for E.P.T. would be £3,000. In circumstances like that, will companies be given the opportunity to go back from their profits standard to either a capital or substituted standard and thereby gain the advantage of this £1,000 additional standard? This is a matter of some interest, particularly to the small concerns whom I imagine the Chancellor desired to benefit.
As I have said, the main interest of the very informative statement by the Chancellor was that he was using the financial resources of the country as an instrument of financial policy to direct our affairs and not merely to balance our revenue and expenditure. The first thing I noted was that he considered it to he of the greatest importance to prevent inflation. As I understood the Chancellor, he was not saying that there ought to be high wages, or in any way impugning the policy of high wages. What he did say was that it was essential to retain the proper relationship between wages and prices. He pointed out that in order to keep prices down, the community had, from year to year, to provide substantial sums of money and that awing to the development of the war, these necessary subsidies were increasing rapidly and that in such circumstances he could not continue indefinitely this system which divorced wages from prices—which allowed wages to go up and which called upon the community as a whole to keep prices steady. I thought that that was a very desirable statement of policy and something which, should have been pointed out.
Then my right hon. Friend dealt with the importance of our export trade, and with that I found myself in complete agreement, except' in so far as he seemed to suggest that exports were necessary in order to maintain full employment. I am not quite sure that that is the right emphasis to express. I think the proper way of looking at exports is that they are essential in order to pay for imports, and that it is because we propose to follow an internal policy of full employment that we require essential imports. Therefore, as we have to pay for these imports, we must have exports. Personally, I do not think it is hardly the right way of looking at the problem to say that exports are essential as a means of maintaining full employment. I think we should make it quite clear that we do not intend, in future, to carry out the policy which was carried out by practically all other countries during the great depression of 1929–32 of endeavouring to export our unemployment. That is in my judgment an entirely wrong policy.
We should realise that prospects for our exports depend upon an expanding world trade and that we should not, if we get into difficult circumstances, endeavour to stimulate our export trade merely in the hope of reducing our unemployment. Such a policy, in turn, would result in other nations bringing embargoes against our exports, which would result in a restriction of world trade from which all nations would suffer. It is in the belief that expanding world trade is the only solution of our problems that I rather regretted that the Chancellor did not say something about the necessity of entering into financial arrangements, in connection with exports and so forth, with the United States of America. I, personally, welcome greatly the publication of the recent Stabilisation Fund proposals. I understand there is to be an opportunity for a Debate on those proposals and, therefore I will not deal with that now. I hope to have a later opportunity of saying something on the particular proposals in connection with that Fund, because the arrangements which we can make between ourselves and America will indeed determine whether or not we shall have a really expansive world economy.
The third point of policy which I noted in the Chancellor's speech, was the question of the rehabilitation of British indus-


tries. I welcome the arrangement which the Chancellor forecast. He told us that the initial cost of new plant, machinery and buildings would be-in varying degree allowed as a charge against the profits of the business; he told us about increased depreciation allowances and he told us that obsolescence allowances for old machinery would be admitted, even if that particular machinery was not replaced. All these proposals are very much to the good, and I am sure that my right hon. Friend's remarks in connection with research, were welcomed in all parts of the Committee. But I was a little disappointed that it was all to be in the future; that he did not indicate that something would be done now. If we wait until the cessation of hostilities to put in the whole of this new plant, and make these various necessary arrangements in connection with the rehabilitation of British industry, we shall find it very difficult. I make the plea, in conclusion, that something should be done, even before hostilities end, to fill our requirements of new machinery and equipment, which requirements are very much in the minds of all people who are concerned with the future of British industry.

Mr. Sexton: It is impossible to grasp some of the large figures that have been placed before us to-day. It is beyond the human intellect to realise a National Debt of £19,000,000,000. If we take the population of the country at 46,000,000 and average it out, every man, woman and child is in debt to the extent of £426. When we examine the National Debt and find that much the greater part of it has been spent on war, we are inclined to ask whether it has been worth while. It has been said that the price of liberty is eternal vigilance. The price of liberty, in hard cash, is the major part of that huge National Debt which we have paid and are prepared to keep on paying till we secure liberty for all the freedom-loving nations of the world. When we come to our annual expenditure, the figures again are astronomical, but the average is something that we can understand. The expenditure in 1943 amounted to £178 per head. We have now reached the happy state of providing by taxation a half of that huge expenditure, and that is a very satisfactory state of affairs on which the country can congratulate itself, because never before in the history of war

has this country reached such a high percentage of revenue to expenditure. No other of the United Nations has reached that high figure.
I should like now to discuss the bridgehead which the Government are setting up, to pass over from war to peace. The Chancellor gave us an encouraging report on what the Government propose to do to assist industry. That is the foundation of a full employment programme, and I am sure everyone will be pleased at what the Government propose to do. But I endorse what has been said from these benches with regard to the Chancellor's pronouncement as to the disadvantage sometimes of high wages. The Budget will be an encouragement not only to those who have heard it expounded, but also to our fighting forces, because it expresses the determination of the country to go right through and win the war. We have been and are still having "Salute the Soldier" weeks. This Budget is not only a salute to the soldier, but to all the Forces wherever they may be, and the saluting base for them is the post of duty wherever that may be, on the beachhead at Anzio, on Monastery Hill at Cassino, in Burma, whether it is high in the sky or anywhere on the Seven Seas. I congratulate the Chancellor and his able assistant on producing such a Budget. I also want to thank them and Members of the Committee for the support they are giving to it, because it will be an inspiration to the boys and girls who are standing at the post of duty.

Mr. Tinker: I may not be as fulsome in my praise of the Chancellor as others have been, but there is one point to which I want to draw attention and on which I would ask for an explanation. I gathered that the subsidies given to stabilise prices are going to be interfered with to balance the rise in wages. The right hon. Gentleman mentioned that the cost of living had gone to 28 per cent. and remained there and that the subsidies which had gone up from £10,000,000 to £190,000,000 and would probably go beyond £200,000,000, would have to be examined. That conveyed to me that subsidies are going to be cut down to allow the cost of living to rise. If that is behind the right hon. Gentleman's mind, there is only one answer to it—that the spiral will continue and there will be an attempt to get increased wages. The


stabilisation of prices has meant to fixed incomes, and lowly incomes, some kind of security in war-time. No one objected to it. It was welcomed by all. Some of us wanted to go further and give greater subsidies, so that those with lower incomes would be sure of getting the commodities of life that they are entitled to. I should like some fuller explanation of the right hon. Gentleman's statement. If it means what it suggests to me, the Budget is going to create a serious position.
I thought that, on the whole, the Chancellor's speech tended to back up private enterprise. If he is going to see that private enterprise gets all the advantages that can be got, it will not be a satisfactory Budget. I want him to be careful how he pursues this line, because we on these benches stand for an entire change of the social system. He must not back up private enterprise to enable it to retain its present hold on the community, and I hope that he will have some regard to the feeling in the country. I want to make a reference to the late Chancellor. I heard each of his Budget speeches, and I felt that he was an able, industrious, astute man, who knew all the moves of the game and tried to meet the wishes of the House of Commons. Another man who is missing in the present Budget Debate is my late friend David Adams, who was Member for Consett. Everybody remembers him sitting on the bench behind me waiting for his opportunity, and he was generally the last to speak on the first day. He was a man who commended himself to us for his keen attention to finance. I was looking up the other day the speech that he made on the last Budget, and I refer to it because it leads me to my present theme. This is what he said after my speech:
I sympathise fully with, and declare my self an adherent of, the view expressed by my hon. Friend the Member for Leigh (Mr. Tinker), that if it is desirable to conscript life, it may be equally desirable to conscript wealth."—[OFFICIAL REPORT, 12th April, 1943; col. 1027, Vol. 388.]
There is no attempt in the Budget to deal with the equalisation of wealth. We cannot get any satisfactory progress until that matter has been fully dealt with. Reference was made in one speech to a man with an income of £72,000 a year who paid £67,000 in taxes. That would lead us to believe that rich people are

getting fewer, because all their money is going into taxation. I have here, however, a long list of fortunes left by people and published in the papers for April. I have been watching them to see whether there is any reduction of rich people in the country. I have here reference on one day to fortunes of £180,000, £80,000 £70,000, £39,000 and £19,000. On the next day there were fortunes of £140,000 £98,000, £65,000, and £63,000; and on another day there were fortunes of £787,000, 136,000, and £103,000. If these people pay such a tremendous amount by way of taxation, how do they retain these vast sums until they diet The Financial Secretary replied to me when last I raised this question and said that I was wrong in thinking that fortunes had been acquired in war time. They are, however, still being acquired in some way or another. If they are not acquired in war time, some people have done jolly well in times gone by. The system is wrong that allows that to go on. This is a kind of thing on which Members like me feel strongly in a position such as the present one. There is an item in the Financial Statement to the effect that there will be an increase of £11,000,000 in supplementary pensions.

The Deputy-Chairman (Mr. Charles Williams): I am afraid that we cannot go into the question of supplementary pensions or into matters of teachers' or Service men's pay. They are right outside this Debate.

Mr. Tinker: I may be wrong, but I want to challenge your Ruling, Mr. Williams. This item is in the Financial Statement, and I claim the right to deal with what is in that statement. Your predecessor in the Chair allowed this matter to be dealt with.

The Deputy-Chairman: We have had this question again and again before the Committee, and it has always been ruled that the Committee cannot, on Budget day, go into questions of pay, pensions and things of that sort. Those matters must stand, on their own, in the Estimates.

Mr. Woodburn: Has not the Chancellor intimated through this White Paper for the first time that there it to be an extra £11,000,000 spent on supplementary


pensions? While I agree with your Ruling, Mr. Williams, that it would be wrong to discuss the whole question, I respectfully submit that my hon. Friend is in Order in discussing the Chancellor's estimate for the coming year.

The Deputy-Chairman: I think not. The whole object of the Estimates is to deal with the various questions covered by them. To-day we are dealing with the finances of the country.

Mr. Tinker: Do I understand, Mr. Williams, that you are ruling me out of Order in dealing with supplementary pensions, which is an item in the Financial Statement and was referred to by the Chancellor and other speakers? Am I not allowed to draw a comparison between those who own the wealth of the country, and those who have no wealth, and to deal with the question of the way in which the money should be raised?

The Deputy-Chairman: I must be quite plain on this. We deal with supplementary pensions on an Estimate which relates to them. We certainly cannot then bring up questions of taxation and methods of collecting the money for them. In the same way, when we discuss the collection of the money, we cannot deal with the question whether these pensions should be raised or not. What the Chancellor said was that money was wanted for this, that and the other thing, but he did not go into the details of why it was wanted. He simply stated that it was wanted for pensions and I did not hold up the hon. Member for referring to that. I held him up to stop him going further into the pensions question.

Mr. Tinker: It is difficult to challenge your Ruling, Mr. Williams, because you are generally so fair, but I feel very keenly on a matter of this kind. I will leave the matter now and follow it up at some other time. Although everybody is pleased that there is no increased taxation, I am not altogether satisfied with the Chancellor's statement. It had a conservative outlook on the present position and it seemed to indicate that the Chancellor wants to build up a system in line with the present system, with the old idea of private enterprise governing our lives. I do not think that that is the view of the country, and it ought not to be the view of this Committee. I hope

that the Chancellor will pay some regard to the feeling in the country, which is that we should work towards a co-operative system, in which all affairs should be in the hands of the State. If we back up private enterprise in this Budget, we shall do the wrong thing.

Sir William Wayland: I rise only to give expression to the agreement of the agricultural community with the Chancellor's statement about loans for reconstruction of farmhouses and farm buildings. It is saddening, when going through the country, to see the state to which farmhouses, cowsheds, not to mention fences, have been reduced because there has been no money, or very little, to put them right. The owner of the land who lets his farm has not the money, and the tenant cannot find the money, even if he wished to. It has been estimated that it would take at least £100,000,000 to put into a proper state of repair all the farmhouses in this country. The £1,000,000 or £2,000,000 will be gratefully accepted as a loan, and I hope that the sum will be considerably added to afterwards, so that in a few years' time we shall not see derelict farmhouses, or fences strung together with a little barbed wire, not for want of willingness to put them right, but for the want of capital. As an agriculturist, I express, on behalf of the agricultural community, our thanks to the Chancellor for what he is doing.

Ordered:
That the Chairman do report Progress, and ask leave to sit again."—[Mr. A. S. L. Young.]

Resolutions to be reported To-morrow. Committee also report Progress; to sit again To-morrow.

MENTAL DEFICIENCY ACTS (DETENTIONS)

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. A. S. L. Young.]

Mr. Bowles: I wish to raise a question relating to mental defectives, and I should like to deal with the matter in the most judicial way I can. It came to my attention three or four months ago, when I found that a number of youngsters had been before the police court and had been sentenced to short terms of


imprisonment. On completing their sentences, they were, apparently, medically examined and were found to be mentally defective. They were ordered to one of these mental institutions or colonies. As the House knows, under the Mental Deficiency Act, 1913, they can be ordered by the Secretary of State for the Home Department to be detained there for one year. On the certificate of two doctors, one the medical superintendent of the institution and the other another medical man, it is on the cards that an individual may be certified for a further five years. At the end of that five years, the individual can be re-certified for another five years.
As a result of raising this matter with the Ministry of Health I received a mass of correspondence from all parts of the country, and it seemed from the correspondence that there was a widespread anguish, not only on the part of parents who had discovered that they had lost legal guardianship and control of their children, but on the part of adolescents growing into adults, who feared they had been deprived permanently of any prospects of being allowed to return home. I am not particularly well up in this matter, but I have done some work on it during the last four or five weeks, and I understand that there are two classes of mental defective. A child under the age of 16 can be certified as a mental defective if it cannot—I am not quoting the actual words of the Act—benefit from a normal course of education. After the age of 16 a person is a mentally defective adult, and there is no question of an education test. People over the age of 16, in the great majority of cases of this kind, do not go to public elementary schools. I think that institutions for mental defectives should be educational institutions. In the time at my disposal, I will confine my remarks to young mental defectives.
I wrote on various occasions to the Board of Control at St. Anne's, mentioning various cases that had been given to me, and I got a reply in more or less the same terms. It was to the effect: "This patient is a feeble-minded person who does not know what is celebrated on the 25th December, does not know how many pennies there are in a half-crown and cannot recite the months in the right order."

The letter generally went on to say that the patient's home was very untidy and dirty and that the parents had lost all control over the child. At that time, and now I confess, I was wrong, I thought there was very little connection between the conditions of a child's home and the fact that it was mentally defective and should remain incarcerated as feebleminded. On making further inquiries, I discovered that there was a considerable amount of concatenation—if that is the right word—between high-grade feebleminded people and bad home conditions, and, often feeble-minded parents as well. Therefore, I have no objection to raise that those two matters were put in the same category, although at first sight they did seem to me to have no relation to one another. I think that I was wrong.
These institutions should be very much more concerned with the education of these children, so as to allow the children to be rehabilitated into ordinary social and communal life. That is what they are for. I discovered that a large number of the children had learnt trades, such as house decoration. The question was, Why did they seldom return to the outer world? I was recently reading a book by a man called J. Duncan, headmaster of the Hampshire County Council Special M.D. School. On page 49, in the early edition, he says this:
As far as possible the needs of the institution and its inmates are supplied by the efforts of the inmates, and some of the products of their labour—e.g., hand-made mats and brushes—are sold. These efforts assist in appreciably reducing the maintenance cost of public funds. One very efficiently-run institution has an average maintenance cost per head of under a pound per week. When one realises that a proportion of the inmates are chronic bed cases, that others are of imbecile grade able to do only the simplest work, and that all need constant social care, and many need considerable medical care, it will be appreciated that the efforts of the higher-grade cases are of considerable economic value.
It seems to me, to put it in my own words, that you have these institutions, and there seems to be no discrimination or no separation of the high-grade mental defectives, the slightly low grade mental defectives and the idiots and the imbeciles. The right hon. Gentleman shakes his head but I have taken some trouble to go into this and in the cases I have inquired into they do in fact mix together.
I should like the House to understand that a person can be certified as being


mentally defective and therefore, in the eyes of certain authorities, presumably a fool because he has only the mind of a child of nine years of age. But a child of nine is not a fool. What happens in the ordinary way is this, and it is a very sad story. You do, in fact, find that children of the same chronological age vary considerably in their mental age, and it is quite possible that in a school class where the average age of the children is 10 years there are some children of a mental age of only seven while the mental age of others is higher than 10. The teacher has a very difficult job in trying to deal with these cases, and the unfortunate thing is that the child below the normal mental age begins slowly and definitely to sink to the bottom of the class, to be regarded as the dunce, to be the butt of the other pupils and sometimes, possibly, the butt of the teacher. He becomes unhappy at school and in due course he has a tendency to play truant.
We have all here played truant. We all—I am sure even my right hon. Friend on the opposite side—have done the same kind of thing, we have played truant, but for different reasons. We have not played truant because we were necessarily unhappy at school, but from the point of view of a spirit of adventure. I am glad to see the Under-Secretary for the Home Department here; I asked him to come. As a result of this kind of unhappiness and playing truant children get into the hands of the police. They come before the magistrates. I know of cases in which the magistrates have acted on the suggestion of the superintendent of a colony that "If you will certify him as feeble minded I will look after him in my own colony." I am not blaming anybody. I wish, as I said at the outset, to do this in the most judicial way I possibly can. I think the system is wrong. Under it there is a tendency for medical men who have not the necessary qualifications in anything to do with psychology being placed in the position of having to look after these children, and also to get cases certified. They and ordinary medical men have the right to certify.
Medical superintendents of a certain number of colonies are in any event very busy men. They have large colonies to look after, and their time is very largely occupied with matters of administration. I think the time has come, in view of some of the legislation which

has been introduced by the Ministry of Labour in the matter of ordinary physical rehabilitation, when these mental institutions should now regard themselves as being occupied with and liable to perform the duties of mental rehabilitation. Unlike the position in the days that are dead, when if a person was physically defective he was regarded as almost unfit to be associated with, and as of no use to the community, now, owing to the work of the Ministry of Labour, such people are fitted-in in a most magnificent way. I feel we need a similar policy in the matter of mental defectives, which does not mean idiots or imbeciles, but a large number who are not regarded as normal who are in these institutions. I feel that we should try, if we can, according to some of our slogans on this side of the House, to provide for "each according to his psychological need. I say finally, as I understand both Ministers are to reply, that this is a matter which should be looked into. I will go further. I will see if I can get the support of other Members for another inquiry. I also feel that this is a matter which cannot be really and truly left out of any post-war planning that has to take place.

The Minister of Health (Mr. Willink): I am very glad my hon. Friend has raised this matter, though I was in a little difficulty because I was not quite sure on what particular points on this very important subject he desired to speak and desired information from me. This Debate arises from a Question he asked and I got the impression that he was not so much concerned with the way in which mental defectives were admitted to institutions as with the safeguards there were against their unduly long detention and that he was also concerned with the matter of their education and development.
Perhaps I might say first that of course there is a great amount of modern Statute law on this subject. There is the Mental Deficiency Act, 1913, as amended by the Mental Deficiency Act, 1927, and their scope is such that it is impossible to describe in detail, on the Adjournment, the regulations with regard to admission, In view of the fact that the hon. Member asked that the Home Department should be represented, I should, perhaps, make it clear that most of the functions of the Secretary of State under the 1913 Act


were transferred to the Minister of Health by the Ministry of Health (Lunacy and Mental Deficiency, Transfer of Powers) Order of 17th May, 1920. So far as admission is concerned, the safeguards are very substantial, with regard to the medical certificate, the rights of parents, and in proceedings before the judicial authority, which consists of selected magisstrates. The Home Secretary is concerned only with persons already detained in prison, or some other place of detention, by sentence or order of the court, and the Orders he makes deal, in the main, with those in approved schools.

Mr. A. Bevan: What kind of doctor issues the certificate?

Mr. Willink: The Home Secretary acts only under an elaborate procedure, very similar to that under which the Board of Control acts. It is all statutory, but I cannot in the time remaining describe it adequately. The Home Secretary's powers are used, in the main, in the case of young people in approved schools—

Mr. Bevan: Any doctor can certify.

Mr. Willink: There are a great many checks on the certificate of any doctor—and to a smaller extent the young people in remand homes or Borstal institutions. A court of law can make an order after conviction, if it is satisfied on medical evidence that there is mental deficiency. I should also say, in introduction, that mental defectives were newly defined in the 1927 Act. They include, as my hon. Friend has pointed out, people described as idiots, imbeciles, feeble-minded persons, and moral defectives. 1, personally, have not had a single specific case brought to my attention by my hon. Friend, but I should gladly have any particular case investigated.
May I deal shortly, first, with the question of unduly long detention, and, secondly, with that of education and the development of the abilities of those, in respect of whom an order has been made? The matter does not rest simply on the order. Within seven days after admission to the institution, the medical officer of the institution has to make to the Board of Control his own medical statement on the case. He may concur with what has been done by the judicial authority, according to their procedure, or he may

disagree. If there is any disagreement, there is consultation, and at any time, with regard to any case, the Board of Control can discharge the patient. As my hon. Friend has pointed out, the conditions of the home are very relevant. There are some homes in which a mentally defective child may be better looked after than in others. The first order operates only for a year. So far as institutions are concerned, the Board of Control have directed that the detention shall be extended to the quarter day immediately after the anniversary of the original order and, unless another order is made, the original order ceases to operate on that date. The case is visited, and there are always two, and more often five or six, visitors, including one medical man at least. That medical practitioner must be a medical practitioner appointed under the Lunacy Acts.

Mr. Bowles: I suppose the medical superintendent would be one?

Mr. Willink: No. In addition to the report of the visitors, there has to be special report and a certificate from the medical officer of the institution. There are arrangements also by which a privately employed medical practitioner, employed at the request of a parent, relative or friend, can make an investigation. Investigations are made at the end of the first year, at the end of the second year, and, after that, at the end of every five years. Also, with regard to young people, when they have reached the age of 21, there must be a special investigation within three months. Then discharge may be ordered; and 'if the visitors do not order discharge, the Board of Control can step in, if it thinks fit, and order discharge. In addition to all these successive investigations, there are, once or twice a year, special visits by Commissioners and inspectors of the Board of Control. All that procedure has been embodied by Parliament in quite recent legislation.
May I pass to what has been done under particular headings—which is all I can manage in the time available—for these unfortunate young persons, and older persons, in institutions? It is very far from being the case that there is any inducement to detain too long. At present, many institutions are overburdened with serious cases and there are applications which cannot be accepted, because of the


shortage of accommodation. There is a constant attempt to release, in one way or another, those who could be cared for, in some other way outside the institution.

Mr. Bowles: Are there not 300 institutions for mental defectives, with bedroom accommodation for 40,000?

Mr. Willink: The accommodation is undoubtedly insufficient. I think I can best put the matter under three heads. First, for children, there is the institution school; and for others, as they get older there are opportunities for learning various occupations. I think I had better describe that with some accuracy. The curriculum in the school has to be suitable for those who are there because they are handicapped in an ordinary school. Then there is training in particular occupations, in such departments as the farm and the garden, the kitchen and the sewing room, training in tailoring, shoemaking and repairing, in joinery, upholstery, brush-making and mat and rug-making, and employment with the engineer, the blacksmith, the painter, and so forth. Rewards are given in appropriate cases, so that, in the sort of instance to which my hon. Friend referred, the person detained may learn the use and the value of money and how to handle it—a very important matter for these people.
Secondly, there is another stage, which the Board of Control have consistently encouraged. That is the system of hostels outside the institution, where those who have been found to be what is described as stabilised, when the way in which they will behave is known, may live more freely, and with less close supervision than in the institution itself, and so may progress. That system has been growing steadily. It is used for those who, as I have said, are described as stabilised and for those who have a good prospect of becoming fit for employment. In February this year, in spite of the difficulties of setting up new institutions in war-time, a circular was issued by the Board of Control, encouraging local authorities to set up hostels of this kind, in existing houses which can be readily adapted. The suggestion is that for such hostels 20 to 25 patients is the appropriate number.

Mr. Bowles: How many such hostels have been set up?

Mr. Willink: I have not the information readily available, but I will let my hon. Friend know.

Mr. Kirkwood: Have any of those hostels been set up?

Mr. Willink: Certainly some have. I cannot give particulars at the moment, but I shall most gladly provide any information of this sort. Now I come to my final point. Although something like 50,000 mental defectives are receiving care and training in institutions, there is a very substantial system of absence on licence. Indeed, out of those 50,000, at any particular time something like 5,000 are on licence. If the local authority does not allow patients to be absent on licence, when, in the opinion of the Board of Control, such absence should be allowed, the Board has again an overriding power. The system has been encouraged by the Board of Control consistently and must, I think, be right.
With regard to discharge itself, I think it must be comforting to those who take an interest—and all should—in this important subject to know that about Boo mental defectives are discharged annually. This is a matter which excites the sympathy of every one of us not only with regard to a young person or older person detained but with regard to relatives and friends and all concerned. Great progress has been made and progress is still made. In any care in which hon. Members are interested, I should be most happy to make inquiries and investigate any facts which they give me.

Mr. Bowles: The discharge of 800 out of 50,000 does not seem to me to show that the institutions are doing their work very well, in rehabilitating these persons and restoring them to society.

Mr. Willink: What one should appreciate is the fundamental difference between mental disorder and mental defect. A mental defect is something that can be mitigated but cannot be removed. Disorder or derangement may become order and arrangement, but there is no way in which a particular defect may be restored.

Mr. Bowles: I am not talking about idiots or imbeciles. I put it to the Minister that a child of nine can walk about this country without getting into trouble. It is only when he gets behind that there is trouble. These people, 300,000 of them, are just below normal mentality.

Mr. Willink: I cannot think that it is logical to disparage any particular figure unless there is some attack on the system of certification. If the system of certification is correct and unless definite faults are pointed out, I doubt if it can be helpful to object to what is being done by basing an argument merely on theory.

Viscount Hinchingbrooke: Has the figure improved from year to year?

Mr. Willink: I could not tell the hon. Member without notice.

Mr. Kenneth Lindsay: How many inspectors has the Board of

Control, and how many inspections are made?

Mr. Willink: I am afraid I cannot give the number of inspectors at the present time. There are commissioners and inspectors of the Board who visit every institution once or twice a year, but to understand what inspections are necessary depends on what is being inspected. If any case of an institution thought to be unsatisfactory were brought to my notice, I should have it inquired into, but one cannot argue a priori what the number of inspectors should be.

Question, "That this House do now adjourn," put, and agreed to.